Brazil

A Brazilian bankruptcy court upheld a restructuring plan for embattled engineering conglomerate Grupo OAS, paving the way for a slew of asset sales aimed at helping pay over 8 billion reais ($2 billion) in liabilities. In a Thursday statement, the São Paulo-based group said that bankruptcy judge Daniel Carnio Costa gave his approval to the plan, which had previously been voted by an assembly of creditors in December. Under the plan, creditors will take an 80 percent loss on their debt and accept repayment for as many as 25 years.

Debt restructuring firms are poised to pull in record amounts of business in Brazil this year as the country's worst recession in decades and a corruption probe that has cast a shadow over dozens of companies leads to a surge in defaults, Reuters reported in an insight. While a slump in prices is squeezing commodities producers - from sugar mills to oil producers and miners - the "Operation Car Wash" investigation into political kickbacks at state oil firm Petroleo Brasileiro SA is also hitting many of its suppliers.

Brazil's Mines and Energy Ministry said on Friday it held talks this month with various investors in the transmission line and wind sectors to feel out potential interest in taking over local projects abandoned by Spain's financially distressed Abengoa SA, Reuters reported. The ministry told Reuters it had met with executives from local and international energy firms including Spain's Cymimasa and Elecnor, China State Grid and Brazil's Engevix and Alupar. It also met with wind investors from Italy's Enel Green Power and local firm Casa dos Ventos.

Power companies with wind-generation capacity could take over transmission line projects in Brazil operated by Abengoa SA after the Spanish construction group's insolvency filing halted work on the systems, Reuters reported. Candidates include groups like Renova Energia SA and CPFL Renovaveis SA that would lose revenue if the transmission lines go unfinished or remain inactive, three specialists with knowledge of the discussions said on Monday. Any proposal to take over Abengoa's rights would require approval from Brazil's electrical power regulator Aneel.

Brazilian mining giant Vale SA on Tuesday said it would borrow $3 billion in emergency financing, a sign of distress from the world’s largest iron-ore producer, The Wall Street Journal reported. Vale said the revolving credit line would “increase liquidity and bridge potential cash flow needs.” It didn’t disclose the interest rate it received and said another $2 billion was available. The miner, which needs capital to pay for expansion projects, is tapping the line of credit partly because it hasn’t been able to garner as much as expected through the sale of assets.

Pack away the nipple tassels and dismantle the floats: carnival has been cancelled, the Financial Times reported. Towns and cities across Brazil are being forced to scrap the annual carnival parade as the country is braced for what is expected to be the worst recession since at least the 1930s. The traditional five-day celebration, set for early February this year, normally offers respite from Brazil’s troubles — even the 2008 global financial crisis failed to damp spirits and spending.

Brazil’s government yesterday said that it repaid $14 billion advanced to it by state-controlled institutions, effectively erasing controversial public financing operations that are at the heart of impeachment proceedings pending against President Dilma Rousseff, the Wall Street Journal reported today. The move, observers say, could take some political pressure off Rousseff and her administration, which have been accused by her opponents of using the operations to hide the severity of the country’s widening budget gap.

Brazil’s government has settled overdue payments to state-run banks stemming mostly from budget maneuvers this year and last, which are the basis for impeachment proceedings against President Dilma Rousseff, Bloomberg News reported today. The Treasury this year paid 72.4 billion reais ($18.2 billion) it owed state banks such as Banco do Brasil, it said today. The amount is included in the 120 billion-real primary budget deficit before interest payments authorized by Congress this month.

Brazil’s government accounts remained weak in November, with a budget deficit equal to 9.3 percent of gross domestic product, the country's central bank said today, according to the Wall Street Journal. The result is slightly improved from October’s 9.5 percent-of-GDP budget gap. Brazil’s gross debt was 65.1 percent of GDP, versus 64.9 percent of GDP in October, revised down from 66.1 percent, the central bank said.

Fitch Ratings cut Brazil’s sovereign-credit rating to junk status on Wednesday, citing the country’s ballooning budget deficit, political turmoil and a deeper-than-expected recession, The Wall Street Journal reported. The decision deals a fresh blow to President Dilma Rousseff as she struggles to revive the economy and avoid impeachment. Fitch becomes the second major credit-rating firm to downgrade Brazil to junk, a move that could trigger a selloff of Brazilian financial assets and make it more expensive for the government to borrow.