More Brazilian companies will face increasing liquidity risk through next year as rising borrowing costs and the harshest recession in decades hamper their ability to service debt, Moody’s Investors Service said on Monday.
A Moody’s team of analysts led by Erick Rodrigues said in a report that the number of companies facing high funding risks rose to 33 percent last year, from 28 percent in 2014. More debt is maturing than companies can generate cash to make payments, while banks are refinancing fewer loans, the analysts said.
The report underscores the problems in Brazil’s strategic industries, which are reeling from the country’s worst recession in over a century, slumping global commodities prices and fallout from a corruption scandal at state firms. Some economists have said the downturn has been the worst since 1901.
The scandal and a probe known as “Operation Car Wash” are hampering the ability of oil, engineering and services companies to honor their debt, a recent central bank report showed.