Brazil

State-controlled Petróleo Brasileiro SA is growing uneasy with some aspects of the business reorganization of ailing oil-drilling-rig builder Sete Brasil Participações SA, a situation that may pose risks on the refinancing of $3.8 billion in debt, two sources said on Monday.

Brazil’s unemployment rate rose sharply in July to its highest level in five years, in the latest sign of the country’s economic malaise as policymakers struggle to turn round a deepening recession and quell a growing political crisis, the Financial Times reported. Unemployment in Latin America’s largest economy rose for the seventh straight month, hitting 7.5 per cent. That is up from 6.9 per cent in June and much worse than the 7 per cent the market had forecast. The figures, which point to a sharp deterioration in Brazil’s labour market, rattled investors.

Brazilian stocks fell, the real led global currency declines and local bond yields rose to records as dim prospects for Latin America’s largest economy weighed on investor sentiment, Bloomberg News reported. The real dropped to a 12-year after President Dilma Rousseff suffered a setback in Congress that eroded measures to pare budgets and avoid a junk credit rating. The benchmark Ibovespa equity index fell after the central bank’s signal that borrowing costs will stay at a nine-year high undermined retailers.

Brazilian companies this year have filed the largest number of bankruptcy protection requests on record, credit research firm Serasa Experian said on Wednesday, the latest symptom of the nation's most severe economic downturn in 25 years, Reuters reported. According to Serasa Experian's indicator of bankruptcies and judicial recovery requests, a total 627 requests were filed across Brazil in the first seven months of the year. That is the largest such number since the enactment of a law on bankruptcy proceedings in 2005.

Out in the Atlantic Ocean, 130 miles off the coast of Brazil, an oil ship the length of New York City’s Chrysler building is at the center of an escalating legal war. This battle pits the crude producer founded by Eike Batista, Brazil’s most notorious ex-billionaire, against bondholders who loaned another of his companies $500 million, Bloomberg News reported. That company -- Batista’s shipbuilder, OSX Brasil SA -- lost the rights to the vessel when it defaulted on bonds in March after filing for bankruptcy protection in 2013.

A corruption probe threatening to engulf Brazil’s government intensified as police arrested a former top minister of ex-President Luiz Inácio Lula da Silva for allegedly orchestrating a scheme that looted billions of dollars from oil giant Petróleo Brasileiro SA, The Wall Street Journal reported. Authorities say José Dirceu, who served as Mr.

Brazil has gone from being a motor of the world economy as one of the fast-growing so-called Bric nations to the sick man of the large emerging markets, the Financial Times reported. Unemployment is soaring, business confidence plummeting. Standard & Poor’s, the ratings agency, is considering cutting its investment grade rating to junk. The country is breaking records in all the wrong ways.

Standard & Poor’s warned Brazil on Tuesday that its investment grade rating was at risk as falling growth and political infighting hurt efforts to restore order to public finances. The agency placed Brazil’s foreign currency rating, which is one notch above junk, on negative outlook for possible downgrade, initially weakening Brazil’s currency, the real, up to 2 per cent against the dollar, the Financial Times reported.

A Brazilian court approved a debtor-in-possession loan to engineering firm OAS SA, the company said, after it earlier this year filed for bankruptcy protection in the wake of a corruption investigation that shut its access to refinancing. In a statement published late on Tuesday, OAS said judge Daniel Carnio Costa freed up the so-called DIP loan of 800 million reais ($254 million) after court-appointed administrator Alvarez & Marsal Holdings LLC gave the go-ahead for the financing facility.

Most industrialists acknowledge the need to tackle the budget deficit, which at 7 per cent last year was the worst in a decade, the Financial Times reported. But many industries in Brazil are heavily dependent on government protection, subsidies and tax incentives to survive in an economy that the World Bank regards as one of the world’s least competitive. Critics feel the axe is falling too heavily on the wrong areas, such as exports, investment and manufacturing.