Companhia Sanea (SBS)

[flatlander_60048]

Brazil Downgraded to Junk Status

S&P Downgrades Brazil to BB+. Bond auction has been canceled and parliment is openly disregarding Rouseff. Dilma looks to be on the verge of impeachment. Historically credit downgrade to junk has marked the market bottom in Emerging markets. Market is down 59% in local currency and ADRs even further due to currency weakness. UBS is saying there is potentially more downside for Brazil.

I'm continuing to bottom fish Shares of SBS based on the technical support, tariff increases, improving drought outlook, and based on the fact that I do not beleive that SBS debt is as vulnerable as is made out by the credit rating agencies.

FL