S&P cuts state of Parana to junk

Standard & Poor’s said it lowered its global scale rating on the state of Parana to BB+ from BBB- and lowered the national scale rating to brAA from brAAA.

The outlook is negative.

S&P said the rating action reflects the state’s “very weak” liquidity, “weak” financial management and economy (compared with international peers’), and “very weak” and volatile budgetary performance due to the state’s excessive spending that has led to wide deficits after borrowings in 2014.

The state’s “average” financial flexibility, reflected in high own-source revenues and its low debt burden, compared with that of other Brazilian states and international peers, partly offset the negatives, the agency said.

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