Lula 4: companies feel the weight of debt and interest rates may fall more slowly
With high interest rates and uncertainty about public accounts, Brazilian companies may face a more difficult scenario in the next government, according to Estadão.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM ESTADÃO · 2 MIN
Brazilian companies may face a more difficult scenario in the next Lula government. According to Estadão, high interest rates combined with uncertainty about public accounts could put pressure on companies precisely at a time when the expectation of a fall in the Selic rate is already more cautious.
The most cited risk is the public debt itself. According to the newspaper, a rising debt, with no solution in place, could slow down the fall in interest rates or even interrupt the cycle of cuts. In practice, money tends to remain expensive for longer, and the expected relief for business credit may arrive more slowly.
Who follows the practical side of the problem is Ricardo Knoepfelmacher, Ricardo K., partner at RK Partners and responsible for restructuring in Brazil. According to him, there is an estimate of more than R$700 billion in negotiation with banks and Fidcs, and the high debt stock is perhaps the biggest problem today.
Gazeta do Povo, in turn, has as its headline the meeting between re-elected president Lula and Trump, in Miami, and cites fiscal pressure and the clash with the Supreme Court. The text published by the vehicle, however, is just a call for a weekly special, without data or statements, which is why these themes appear here only as a background.
What is at stake is the combination of debt, interest and fiscal policy. With the Selic rate having no clear room to fall, indebted companies tend to renew their debts at a higher cost, and uncertainty about the government's accounts makes investment planning difficult. For the editorial line of this newspaper, which defends fiscal responsibility and lower taxes, the credibility of public accounts is precisely the central point of this discussion.
What changes for the investor
For those who invest in the stock market, interest rates and the dollar, the scenario calls for attention to company debt when reading balance sheets, because highly indebted companies tend to feel more of a Selic that falls slowly or stops falling. Monitoring the trajectory of public debt, the progress of corporate debt negotiations and the fiscal signals of the new government helps to measure this risk. This analysis is not a buy or sell recommendation and does not project prices.
Automatically translated from Portuguese.
