A majority of Brazil’s Supreme Court justices have voted to uphold the constitutionality of a law granting the central bank formal autonomy, a key piece of legislation considered by investors as a victory for monetary policy making in Latin America’s largest economy, Bloomberg News reported. Eight justices voted in support of the law on Thursday, and two against.
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Brazil's Supreme Court will debate on Wednesday whether a law to establish the autonomy of the central bank, insulating it from political interference, is constitutional or not, Reuters reported. The law does not change the way the bank sets interest rates but distances it from politics by setting fixed four-year terms for its governor and directors that will no longer coincide with the presidential election cycle. Far-right President Jair Bolsonaro signed the measure into law in February, but two left-wing parties have questioned whether it violates the country's constitution.
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Brazil’s President Jair Bolsonaro has begun expressing irritation at the central bank’s newfound autonomy as surging inflation presents a threat to his 2022 reelection prospects, government officials told The Associated Press. On Thursday, during a flight home from Mato Grosso state, Bolsonaro said that he regretted signing the bill into law earlier this year that granted the bank autonomy, a high-level official aboard told the AP.
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Brazilian prosecutors asked a bankruptcy court on Wednesday to compel miners Vale SA and BHP Group Ltd to fully pay offtheir Samarco joint venture's 50.7 billion reais ($9.47 billion) debt, according to a court document reviewed by Reuters. Samarco filed for bankruptcy protection in April as it struggled to restructure its debt, which it stopped servicing after a dam burst at a mine in 2015, killing 19 people, releasing a giant torrent of sludge and halting production.
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Swiss-Irish food group Aryzta has agreed a new €500 million revolving credit facility with three banks and has announced the disposal of its Brazilian businesses, the Irish Times reported. No financial details have been disclosed on the sale of the Brazilian subsidiaries to Grupo Bimbo SAB de CV. The transaction is expected to close shortly. Aryzta said the new credit facility, which is expected to be used by early October, is underwritten by Credit Suisse, Rabobank and UBS. It replaces the group’s current €800 million facility, which maters in September 2022.
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The superintendence of Brazil's competition regulator Cade said on Friday that it viewed an asset sale by Brazilian telecom Oi SA as "complex," suggesting that TIM, Telefônica Brasil and América Móvil's Claro may struggle to wrap up a quick sale, Reuters reported. The three companies won an auction to buy Oi's mobile network operations for 16.5 billion reais ($3.17 billion) in December, pending regulatory approval, after Oi filed for bankruptcy protection in 2016.
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Creditors of bankrupt miner Samarco Mineracao SA, a joint venture between Vale SA and BHP Group Plc, objected to the company's restructuring plan on Thursday, according to a court document, Reuters reported. Creditors said the plan's main goal is to protect Samarco's giant shareholders, Vale and BHP, and reduce future payments to creditors. They also rejected Samarco's offer to apply an 85% haircut to all creditors, including shareholders Vale and BHP, which extended 24 billion reais in loans to the company. Debt payments to creditors would occur in 2041.
Brazilian telecom Oi SA said on Wednesday it had received the go-ahead from a court to sell a majority stake in its fiber optic business to funds managed by Banco BTG Pactual, Reuters reported. Oi, which filed for bankruptcy protection in 2016 and has since been selling assets to pay creditors, said the court had determined there were no other bids on the table. Oi in April accepted a 12.9 billion reais ($2.5 billion) offer for a 57.9% stake in its fiber optic business from BTG’s funds.
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Petroleo Brasileiro SA raised about $2.3 billion through the sale of its remaining stake in Brazil’s largest fuel distributor in the biggest equity transaction in Latin America this year, Bloomberg reported. Petrobras, as the company is known, fully exited Petrobras Distribuidora SA in an offering that priced at 26 reais ($5.23) a piece, according to company filings. The sale is part of a broader plan from the oil giant to exit non-core businesses, cut debt and focus on deep-water projects. The downsizing is also part of the government’s strategy to divest state-run assets.
Brazilian miner Samarco Mineracao SA, an iron ore joint venture between Vale SA e BHP Group Ltd, plans to raise $2 billion in fresh capital as part of its plan to exit bankruptcy protection, according to court documents, Reuters reported. Samarco plans to raise the fresh funds from investors through a competitive process roughly 30 days after a Brazilian judge approves its restructuring plan, which has yet to be discussed with creditors. The proceeds will fund its operations between 2022 and 2027.
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