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S&P downgrades BM&FBOVESPA following new Brazilian stress test

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S&P downgrades BM&FBOVESPA following new Brazilian stress test

Standard & Poor's Ratings Services on April 29 lowered itscredit ratings on BM&FBOVESPASA following the results of a stress test that contemplated a Brazildefault in foreign and local currency.

The rating agency said that it downgraded the Brazilian stockexchange operator's long-term issuer credit rating to BB from BB+, while cuttingits short-term issuer credit rating to B from A-3.

In doing so, S&P removedBM&FBOVESPA from CreditWatch with negative implications; however, the outlookis negative for the long-term ratings, as S&P now expects BM&FBOVESPA'sratings to move in tandem with Brazil's sovereign ratings.

"The rating action follows our assessment of BM&FBOVESPA'spotential resilience to a hypothetical scenario wherein Brazil defaults both inlocal and foreign currency," S&P said. "Under this much harsher scenario,we assess the central counterparty clearing house would not have enough resourcesto absorb potential clearing losses."

S&P also noted that the company sold off its dollar-denominated investments in , which the ratingagency called "an important countercyclical asset against developments in Brazil,"as part of its proposed mergerwith Cetip SA.

S&P Ratings and S&PGlobal Market Intelligence are owned by S&P Global Inc.