Brazil

Brazil’s consumer-loan default rate fell in June for the first time in three months, as the government’s drive to lower borrowing costs provides relief to indebted families, Bloomberg Businessweek reported. The consumer default rate declined to 7.8 percent from a revised 7.9 percent in May, the central bank said in a report distributed today in Brasilia. The company loan default rate slid to 4 percent from 4.1 percent over the same period.

The Brazilian central bank, concerned by a deepening scarcity of funding for small- and mid-sized lenders, is considering creating a fund to invest in sales of loan-backed receivables, O Estado de S. Paulo newspaper reported on Monday. So-called mid-cap banks are responsible for about 220 billion reais ($108 billion) in loans, or about 10 percent of Brazil's total outstanding lending, the report said. Banks in that segment are facing a dearth of funding in the wake of the central bank's seizure of Banco Cruzeiro do Sul for alleged accounting irregularities.

Brazilian debt-laden power distributor Celpa and creditors halted dent restructuring talks in order to allow the company to negotiate a sale to rival Equatorial Energia, an official told Reuters on Monday. Mauro Santos, the official in charge of overseeing Celpa's bankruptcy protection filing, said in an interview that talks will remain suspended until August 9. Equatorial said recently that it entered exclusive talks with Celpa over a potential sale. Read more.

Brazil’s consumer loan default rate rose to the highest in 30 months, reinforcing concerns that households struggling with debt could further dent Brazil’s credit-driven growth model. The consumer default rate in May rose to 8 percent, from a revised 7.8 percent in April, the central bank said in a report distributed today in Brasilia. The default rate on company loans remained unchanged at 4.1 percent, Bloomberg reported.

Equatorial Energia, a Brazilian power holding company, and private-equity fund GP Investiments expressed interest in buying all or part of debt-laden power distributor Celpa, according to a securities filing on Tuesday, Reuters reported. Celpa, a unit of power company Rede Energia serving the northern state of Pará, filed for bankruptcy protection in February, citing a deterioration in its finances. The company presented a debt restructuring plan last month to a court in that state to win Celpa more time to pay its debt.

Brazil's debt-laden power distributor, Celpa, proposed a 40 percent reduction in the value of its liabilities as part of a debt renegotiation proposal seeking to stave off bankruptcy, according to a court document released on Monday, Reuters reported. Celpa, controlled by electricity holding company Rede Energia, plans to raise 650 million reais ($337 million) through the sale of local debt notes that can be converted into shares after a certain period, the document said. The plan also includes Celpa's obtaining 200 million reais in fresh credit lines through the end of 2013.

A group of Brazilian and foreign investors led by buyout firm Laep Investments may bid for Brazilian power distributor Celpa, betting that a bold turnaround could save the debt-laden company from near-bankruptcy. Laep, a private equity firm that invests mainly in distressed companies, may team up with two energy funds from the United States and one from Canada to bid for Celpa, Luiz Cezar Fernandes, chief executive for São Paulo-based Laep, told Reuters. He declined to elaborate on potential terms.

While not necessarily predicting a bust to Brazil’s boom, a budding group of turnaround professionals in the South American nation are getting ready for what they see as an inevitable shakeup, The Wall Street Journal Bankruptcy Beat blog reported.

Rede Energia, the cash-strapped Brazilian power distribution company, will reach out to creditors to seek an out of court debt restructuring as it pledged to keep servicing its onerous foreign liabilities, Reuters reported. The company will contact holders of its U.S. dollar-denominated perpetual notes as "part of a potential debt restructuring program," according to a securities filing signed on Monday by Maurício Halewicz, the company's investors relations director.

China intends to extend renminbi loans to other Brics nations, in another step towards the internationalisation of its currency, the Financial Times reported. The China Development Bank will sign a memorandum of understanding in New Delhi with its Brazilian, Russian, Indian and South African counterparts on March 29, say people familiar with their talks. Under the agreement CDB, which lends mainly in dollars overseas, will make renminbi loans available, while the other Brics nations’ development banks will also extend loans denominated in their respective currencies.