Brazil

Brazil posted a wider-than-expected current account deficit in November but the figure as a proportion of gross domestic product (GDP) continued to decrease, data from the central bank showed on Wednesday, Reuters reported. The current account deficit in Latin America's largest economy totaled $1.6 billion in November. Economists polled by Reuters expected a $400 million deficit. Brazil's $6.7 billion trade surplus in the month, larger than the $4.7 billion one reported a year ago, was not enough to offset an increase in the factor payment and service deficits, the central bank said.

Creditors of distressed Brazilian retailer Americanas SA approved a restructuring plan to overhaul 50 billion reais ($10.3 billion) of debt in a key step to applying a recovery plan nearly a year after its sudden implosion due to a multi-year fraud, Bloomberg News reported. With more than 97% of banks, bondholders and suppliers represented at the virtual meeting, the creditors gave the company the green light to proceed with the plan that envisions a capital injection of 24 billion reais in 2024 and recovery rates close to 30%.

Economic activity in Brazil performed worse than expected in October, central bank data showed on Wednesday, corroborating broad readings of economic cooling, Reuters reported. The IBC-Br index, a key predictor of gross domestic product (GDP), fell by a seasonally adjusted 0.06% from September. On a non-seasonally adjusted basis, the IBC-Br was up 1.54% over October 2022 and grew by 2.19% in the 12 months. Latin America's largest economy has previously prospered this year on the strength of its agribusiness and extractive industries.

S&P Global Ratings lifted Brazil’s credit score after the recent approval of an overhaul of the country’s tax code added to a series of economic reforms that have been implemented in the past few years, Bloomberg News reported. S&P raised Brazil’s sovereign rating by one notch to BB, two levels below investment grade, putting it on par with Guatemala and Dominican Republic. The outlook is stable.

A Sao Paulo judge on Tuesday approved bankruptcy protection for SouthRock Capital, which runs all Starbucks coffee shops and TGI Fridays restaurants in Brazil, according to a court filing, Reuters reported. SouthRock had filed for protection from creditors in late October. SouthRock said in a statement that with the approval, it will continue to restructure operations with the aim of protecting employees and customers, while it intends to keep operating stores as normal.

Brazil’s annual inflation rate fell to within the central bank’s target range, keeping policymakers on track to deliver a fourth straight borrowing cost cut at Wednesday’s meeting, Bloomberg News reported. Official data released Tuesday showed consumer prices rose 4.68% in November from a year earlier, just below the 4.7% median estimate of analysts surveyed by Bloomberg. Monthly inflation hit 0.28%. This year, the central bank targets annual inflation at 3.25% with a tolerance range of plus or minus 1.5 percentage points.

Gol Linhas Aereas Inteligentes SA plans to restructure its balance sheet yet again as it buckles under a heavy debt load and the high costs of operating an airline in Brazil, Bloomberg News reported. Gol hired Seabury Capital to help review its debt and other financial obligations, and free up cash by renegotiating its deals with lessors, the company said in a filing Friday. The move triggered a downgrade to CCC- from CCC+ by S&P Global Ratings, which warned of room for a further cut amid refinancing risks.

Brazil's government aims to extend the deadline for its broad consumer debt renegotiation program "Desenrola" by an additional three months, said a top Economy Ministry official on Wednesday, Reuters reported. The original closing date was set for the end of this year. As a campaign promise of leftist President Luiz Inacio Lula da Silva, the government launched the program to ease the financial burden on families, strained by the pandemic and high borrowing costs following a previous inflation surge.

Brazil's economy avoided contraction in the third quarter, extending a run of better-than-expected growth, even as it slowed sharply due to falling investment and the fading impact of a robust harvest to start the year, Reuters reported. Latin America's largest economy grew by a seasonally adjusted 0.1% in the three months through September, government statistics agency IBGE said on Tuesday. Economists had forecast a 0.2% drop in a Reuters poll.

Brazil's central bank chief, Roberto Campos Neto, said on Monday that the bank successfully overcame some challenges to its autonomy posed by the new administration of President Luiz Inacio Lula da Silva, despite what he termed some "noises" in the past year, Reuters reported. Speaking at an institutional event, he said the central bank managed to maintain decisions based on technical guidelines throughout this new government in which, for the first time, the new executive branch had to coexist with a central bank chief chosen by the previous administration.