Brazil’s Crushing Debt Loads Are Leading to a Restructuring Boom

Brazil’s economic quagmire, with an ever-growing corruption scandal on top of the longest and deepest recession in at least a century, is producing an unprecedented era of corporate debt restructuring in the country.

The borrowing binge Brazilian companies went on during the country’s economic boom earlier this decade has now turned into an albatross as tens of thousands of protesters take to the streets and lawmakers move toward impeachment proceedings against President Dilma Rousseff.

International issuers from the country had $293 billion in bonds outstanding at the end of December, up from $90 billion at the end of 2002, according to the Bank for International Settlements. Access to capital has evaporated, forcing companies from builderOAS SA to commodity trader Ceagro Agricola Ltda. and phone carrier Oi SA to restructure. Debt of airline Gol Linhas Aereas Inteligentes SA and steelmaker Usinas Siderurgicas de Minas Gerais SA is trading at a discount of half the face value or more as investors speculate on which company will be next.

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