The international bond market all but closed its doors to
Brazilian companies in 2015. The political uncertainties, combined
with the fall-out from the Lava Jato corruption scandal (which led
Petrobras to delay publication of its financial results by almost
six months and has resulted in the incarceration of top-level
executives of several of the country´s largest corporations)
dampened investor appetite for Brazil risk, thereby significantly
raising the financing costs of Brazilian issuers.
However, Brazilian companies with good credit ratings are taking
advantage of the exchange rate coupon (the difference between the
internal and external interest rates) and currency volatility by
accessing the external debt market through so-called 4.131 foreign
loans. While no official figures exist as to the increase in the
volume of "4.131" loans, the rise in this form of lending
has been widely attested to by Brazilian bankers.
