The management of troubled Brazilian retailer Americanas SA denied the existence of the financial operations that led to an accounting scandal early this year, a report by local newspaper O Globo showed on Wednesday, citing internal investigation documents, Reuters reported.

Brazil's Secretariat of Economic Policy (SPE) said on Thursday that the sharp 2022 economic slowdown is mainly due to reduced liquidity in the external environment and the contractionary cycle of monetary policy in the country, Reuters reported. In a statement about the GDP performance, which rose 2.9% last year compared to 5% in 2021, SPE said that the country's high benchmark interest rate worsens the conditions of both bank and non-bank credit, posing a risk to activity this year by making it difficult for companies to roll over debt.

Brazilian corporate bonds got hammered in February after the implosion of Americanas SA, further weakening the outlook for firms already wrestling with high borrowing costs, Bloomberg News reported. Six of the 10 worst-performing issuers in Latin America this month are Brazilian companies, data compiled by Bloomberg show. Dollar-denominated notes from Gol, Atento and Light lost at least a quarter of their value, while Azul, Stone and BRF bonds delivered losses of between 10% and 15%.

Outstanding loans in Brazil decreased by 0.3% in January, according to central bank data on Monday, marking the first decline in a year, Reuters reported. The result suggests a slowdown that is likely to gain momentum in a scenario of high borrowing costs following the aggressive monetary tightening implemented by the central bank to curb inflation. Outstanding loans fell to 5.3 trillion reais ($1 trillion) in January, with loans to companies decreasing by 2.4%, while credit to families rose by 1.1%.

The Brazilian government is closely monitoring the credit market to ensure liquidity and considering measures for specific sectors, Treasury Secretary Rogerio Ceron said on Monday, Reuters reported. His comments come amid concerns of the new leftist administration of President Luiz Inacio Lula da Silva regarding the impact of high borrowing costs on economic growth, as the country's benchmark interest rate remains at a six-year high of 13.75% to combat inflation. "The government is carefully monitoring the credit market to ensure liquidity and access," Ceron told a news conference.

Brazilian retailer Americanas SA on Thursday failed to reach a deal on proposal to creditors that included a multi-billion-real capital injection by key shareholders as part of its bankruptcy process, Reuters reported.

Brazil's economic activity increased by 2.9% in 2022, according to a central bank index released on Thursday, boosted by the services sector and defying earlier predictions of mild growth, but with recent months' performance showing loss of momentum, Reuters reported. After starting the previous year with a forecast of a 0.3% expansion for the Brazilian economy in 2022, private economists surveyed weekly by the central bank now project 3% growth, on the back of resilient services activity and a stronger labor market.

Investors are losing faith in Brazil’s corporate borrowers in the aftermath of Americanas SA’s implosion, defying reassurances that the century-old retailer’s collapse was a one-off with no broader implications, Bloomberg News reported. Instead, in just the few weeks since the default, power company Light SA, clothing retailer Marisa Lojas SA and travel-agency CVC Brasil have all hired advisers to restructure their debt.

Brazil’s largest publicly-traded banks have set aside 9.3 billion reais ($1.8 billion) for potential losses tied to the collapse of retailer Americanas SA, which is adding to an increasingly complicated credit environment in the South American nation, Bloomberg News reported. While banks didn’t specifically name the retailer as the company responsible for higher provisions in their earnings statements, the impact of the firm’s sudden downfall after uncovering 20 billion reais in accounting “inconsistencies” last month is clear to see in fourth-quarter results.

Brazilian hedge fund manager SPX Capital is among asset management firms taking the lead in a group of local bondholders of troubled retailer Americanas SA organizing for restructuring negotiations, Bloomberg News reported. SPX, XP Asset Management, Riza, Icatu Vanguarda, Prada, Moneda and Exes were appointed as members of the committee that will represent a group of holders of the firm’s domestic debt, according to a document reviewed by Bloomberg. The group also approved hiring law firm E.Munhoz Advogados as its legal adviser, according to minutes from a Feb. 6 meeting.