Exactly one month ago, in the aftermath of the Chinese devaluation announcement, we made a simple prediction.

Biggest immediate loser from China's devaluation: Brazil — zerohedge (@zerohedge) August 11, 2015

Today, following the overdue, long anticipated, and yet "shocking" downgrade of Brazil by the S&P to junk, this prediction is coming true.

First, here is the currency, which is plunging to a fresh YTD low of just below 3.91, and which has a long way to go at least according to SocGen which now sees the USDBRL rising to 4.4 over the next 8 weeks: a whopping 15% devaluation over the next 2 months!

In other words, it could get worse fast, and as Bloomberg notes the next step could be a circuit breaker: "Continued selloff in DIs would risk triggering circuit break, which kicks in when rates rise/fall 80bps vs prior day’s official BM&F fixing intraday. Trading of BM&F’s USD/BRL 1st future will be halted if price hits 4060.33, equivalent to a 6% move vs yday’s official closing at 3830.57; while spot BRL would continue to trade, liquidity likely to be very poor given dominant role of futures trading."

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Next, the Braziling ETF, the EWZ, is already pricing said devaluation in and was about 5% down as of this moment.

The Bovespa futures are looking very ungreen this morning.

But the biggest risk event for Brazil and its soaring double deficits, is that suddenly the entire nation which for years was so dependent on Chinese growth and is now giving it all back in spades, is that it is about to be locked out of the markets. Here's why:

BRAZIL TREASURY CANCELS LTN BOND AUCTION TODAY

This is the second LTN bond auction canceled in 1 week, and will lead many to ask: just how will Brazil - with its foundering economy (which we warned first about back in late 2014), and suddenly suddenly locked out capital markets, fund itself?