OREANDA-NEWS. Fitch Ratings has downgraded the following Brazilian States:

--Sao Paulo Issuer Default Rating (IDR) to 'BBB-' from 'BBB';
--Maranhao to 'BB' from 'BB+';
--Rio de Janeiro to 'BB' from 'BB+'.

The Rating Outlook Remains Negative.

A full list of actions follows at the end of this release.

KEY RATING DRIVERS

The rating actions follow the recent downgrade of Brazil's sovereign ratings to 'BBB-' from 'BBB'(see 'Fitch Downgrades Brazil to 'BBB-'; Outlook Negative', dated Oct. 15, 2015 at www.fitchratings.com).

Considering the features of the Brazilian institutional framework, Fitch does not believe any subnational entity to be rated higher than the sovereign. This is the case of Sao Paulo, whose ratings are equalized with the sovereign at 'BBB-'.

For Maranhao, there is above average reliance on federal transfers, corresponding to more than 50% of the state's operating revenues in 2014. Rio's ratings downgrade reflects its relatively higher reliance on oil related activities, thus leveraging on the implicit debt support Fitch believes the state should receive from the Brazilian Federal Government in case of need.

RATING SENSITIVITIES

Sao Paulo, Maranhao and Rio's IDRs should move in tandem with Brazil's sovereign ratings. They would be affected by further changes in the sovereign ratings or Outlooks and/or in the government's willingness to provide support.

KEY ASSUMPTIONS

The ratings and Outlooks are sensitive to the following assumptions:

--Fitch does not expect a change in the government's willingness to provide support for subnational debt in case of need.

--Fitch assumes that Brazilian subnationals maintain international and domestic market access even if there is return of higher international financial volatility and further domestic confidence shocks.

The rating actions are as follows:

State of Sao Paulo:
--Long-term Foreign and Local Currency IDRs downgraded to
'BBB-' from 'BBB'; Outlook Negative;
--Short-term Foreign and Local Currency IDRs downgraded to 'F3' from 'F2';
--National Long-term Rating unchanged at 'AA+(bra)'; Outlook Stable;
--National Short-term Rating unchanged at 'F1+(bra)'.

State of Maranhao:
--Long-term Foreign and Local Currency IDRs downgraded to 'BB' from 'BB+'; Outlook Negative;
--Short-term Foreign and Local Currency IDRs affirmed at 'B';
--National Long-term Rating unchanged at 'AA-(bra)'; Outlook Stable;
--National Short-term Rating unchanged at 'F1+(bra)'.

State of Rio de Janeiro:
--Long-term Foreign and Local Currency IDRs downgraded to 'BB' from 'BB+'; Outlook Negative;
--Short-term Foreign and Local Currency IDRs affirmed at 'B';
--National Long-term Rating unchanged at 'A+(bra)'; Outlook Negative;
--National Short-term Rating unchanged at 'F1(bra)'.