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.

Banks began cutting access to credit to debt-laden Brazilian electricity distributor Celpa following news reports that its parent company, Grupo Rede Energia, was up for sale, the company's largest shareholder said on Tuesday, Reuters reported. Celpa filed last week for bankruptcy protection in a Brazilian court, citing a "very difficult financial and economic situation." Celpa's access to credit has dropped dramatically since November, when news of Grupo Rede's sale first arose, Jorge Queiroz Jr., who owns 54 percent of Rede, told regulators at a hearing.

Celpa, an electricity distribution company owned by Brazil's Grupo Rede Energia , filed for bankruptcy protection under Brazilian law on Tuesday, according to a securities filing, Reuters reported. "In spite of the efforts by management with creditors and potential investors (in the company), the request for bankruptcy protection was inevitable as the financial and economic situation of Celia aggravated," the filing said, adding that the company aims to keep serving its customers. Read more.

As lending has expanded in Brazil, so too have new opportunities for debt collection, which for the first time is starting to become big business in Brazil, the Wall Street Journal reported today. Brazil's banks have been on a lending boom in recent years, as relatively steady economic growth has led to record low unemployment and rising salaries. The volume of credit in Brazil has almost doubled, and now accounts for nearly 50 percent of gross domestic product. Total loans reached 2 trillion Brazilian reais ($1.1 trillion) in November, according to the central bank.