Brazil

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.

Brazil sugar and ethanol producer Tonon Bioenergia SA, which operates three mills with a total capacity to process 8.2 million tonnes of cane per year, has sought court protection against creditors, the company said late on Wednesday, Reuters reported. Tonon said its debt, largely denominated in dollars, soared following the recent weakening of Brazil's currency. The sugar group's debt in Brazilian reais jumped by 69 percent by the end of September to 2.66 billion ($707 million) compared to the same time a year earlier.

Brazil’s woes deepened on Wednesday as Moody’s Investors Service downgraded all ratings for embattled oil group Petrobras, and the country faced the threat of losing its investment grade credit rating from the agency, the Financial Times reported. Moody’s downgraded all ratings for Petrobras to Ba3 from Ba2, and placed them on review for possible further downgrade. “These rating actions reflect Petrobras’ elevated refinancing risks in the face of deteriorating industry conditions that make it more difficult to raise cash through asset sales,” the agency said.

Spanish conglomerate Abengoa, teetering on the verge of bankruptcy, has halted construction of power transmission lines in Brazil, a potential setback for the South America nation's bid to emerge from its worst energy crisis in 14 years, Reuters reported. Unions representing construction workers, a wind power industry group and Abengoa's sub-contractor on the new power lines said the Spanish company informed them of the interruption in recent days.

Some of Grupo BTG Pactual SA’s fixed-income funds have lost about half of their net assets in the week that followed the arrest of the firm’s billionaire founder, Andre Esteves. Clients pulled a net 6.7 billion reais ($1.8 billion) in the week after Esteves was jailed as part of a corruption probe in Brazil, according to the latest available data compiled by Bloomberg. That represents more than half of the combined net assets of the 10 fixed-income funds listed on the bank’s website, which totaled 12.7 billion reais the day before the arrest.