Credit rating agency Moody's cut Brazil's investment grade yesterday (Feb. 24). The rating served as a guarantee that the country will not default on its debt. The company lowered its rating for Brazil to Baa2, the second highest grade for junk.

Moody's was the only among the three biggest ratings company which had not stripped Brazil's of its investment grade, previously Baa3, the lowest above junk. Apart from the downgrade, the agency changed the country's outlook to negative, which means further reductions may be on their way in the upcoming months.

According to Moody's, one of the reasons for the cut is deterioration in indicators predicted for Brazil's debt, against a backdrop of low economic growth, with the government's debt likely reaching over 80 percent of the GDP in three years.

The agency also mentioned challenging political dynamics, which should make fiscal solidity efforts more difficult and delay structural reforms.