Brazil corporations face challenging credit conditions
Credit conditions for Brazilian companies remain challenging due to the high uncertainty that is generated by the upcoming general election in October.
"Brazilian corporates remain under pressure during 2018, and the political agenda is playing a key role in that trend," said Debora Jalles, a director at Fitch Ratings. "A question mark remains on the level of corporate cash flow rebound as the election outcome will be crucial in assessing the likelihood and degree of this recovery," she added.
The weak recovery of Brazil's economy and foreign exchange volatility are also factors affecting business confidence and the credit market's overall mood, the Fitch analyst noted.
Brazilians go to the polls on October 7 to vote for president, state governors and legislators. All the rating agencies agree that Brazil needs to implement several reforms, especially on the fiscal front to restore the long-term health of its public finances. However, the more reform-friendly presidential candidates have all been struggling to gain traction in the polls.
Given the uncertain political scenario, several Brazilian companies made the decision to anticipate their financing needs. Firms raised 132bn reais (US$33.8bn) in the debt and equity markets in January-July, up from 97.2bn reais in the same period of 2017, according to local finance and capital markets association Anbima.
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