Brazil

A $4 billion accounting shortfall would typically raise alarm bells for an auditor. Somehow, a PricewaterhouseCoopers LLP affiliate didn’t catch it at Americanas SA, Bloomberg News reported. Investor and consumer groups are calling for closer scrutiny of the accounting firm after the unveiling of balance-sheet irregularities that led 93-year-old Brazilian retailer Americanas to seek protection from creditors last month. The gap came in part from supplier financing that wasn’t reflected the right way in the company’s financial statements, which have been audited by PwC since 2019.
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Brazil's central bank has expressed concern at increased inflation expectations, saying that a fiscal framework revision and government stimulus package may lead to upward pressure on consumer prices, Reuters reported. In the minutes of its Jan.31 - Feb.1 meeting, when the rate-setting committee kept the benchmark rate at 13.75%, some committee members noted that the fiscal package presented by the Finance Ministry should mitigate the fiscal risks. Nonetheless, "it will be important to monitor the challenges for its implementation," the minutes added.
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Top Brazilian banks that are creditors of distressed retailer Americanas SA plan to go after personal assets of billionaires who are the firm’s biggest shareholders: Jorge Paulo Lemann, Marcel Telles and Carlos Sicupira, Bloomberg News reported. The firms will make the move if the billionaires don’t rescue the company with combined capital injections of at least 15 billion reais ($3 billion). The billionaires have offered no more than 6 billion reais.
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Oi SA, the distressed Brazilian telecom operator, asked a court to shield it from creditors ahead of a major debt payment, in what may lead to a second bankruptcy protection process in seven years, Bloomberg News reported. The company, which underwent one of the largest corporate restructurings in Brazil’s history — that began in 2016 and ended just last year — said it needs urgent help to fend off creditors, according to a filing to a Rio de Janeiro court seen by Bloomberg News. The company confirmed the request for a preliminary injunction on Thursday.
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Brazil's currency firmed and interest rate futures jumped on Thursday as a more hawkish outlook from the central bank led economists to push back forecasts for rate cuts to next year, Reuters reported. The central bank's policy statement was a setback for newly inaugurated President Luiz Inacio Lula da Silva, who has blasted the level of interest rates - maintained at a six-year high of 13.75% on Wednesday - as an obstacle to economic growth.
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Brazil's government debt as a share of gross domestic product ended 2022 at its lowest level in more than five years, central bank data showed on Monday, helped by nominal economic growth and net public debt redemptions, Reuters reported. The country's gross debt fell to 73.5% of GDP in December from 74.6% in November, accumulating a 4.8 points contraction in the year, to its lowest ratio since July 2017, when it reached 73.2%. The reduction was mainly led by a nominal rise in GDP, which is also affected by inflation.
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Brazil's outstanding public debt is expected to increase this year up to 14%, the Treasury said on Thursday, and it stressed that commitment to the public accounts balance will be essential to lengthen the country's debt profile, Reuters reported. In its Annual Financing Plan, the Treasury set the 2023 public debt target at a range between 6.4 trillion reais and 6.8 trillion reais, up from last year's 5.951 trillion reais ($1.2 trillion).
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Brazilian shopping chain Americanas SA yesterday filed for chapter 15 bankruptcy, a move that protects its U.S. assets while insolvency proceedings play out in its home country, Bloomberg News reported. The retailer nosedived in January after becoming mired in an accounting scandal. The firm, backed by billionaire Jorge Paulo Lemann, filed for bankruptcy at a court in Rio de Janeiro on Jan. 19. In disclosures to investors, the firm implied it misreported numbers connected to some of its financing and wrongly deducted interest paid to lenders from its liabilities.
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Brazilian retailer Americanas SA reported 7,720 creditors and debt totaling nearly $8 billion within its restructuring process, a Rio de Janeiro court said on Wednesday, Reuters reported. Americanas, backed by the billionaire trio that founded 3G Capital, entered bankruptcy protection last week after disclosing "inconsistencies" in its accounting, leading top investors such as BlackRock and Capital International to scale back their positions in the firm.
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