Brazil’s prolonged period of high interest rates is driving a sharp increase in distressed debt opportunities, as rising defaults encourage specialist investors to acquire and restructure non-performing assets.

Despite the Central Bank’s recent cut in the Selic rate to 14.25%, economists expect borrowing costs to remain above 14% throughout 2026, while provisions for doubtful loans have reached their highest level on record. Against this backdrop, investment managers including JiveMauá, Mobius Capital, IOX Group and Neo Investimentos are expanding their activities in distressed credit.

NeoFeed, citing data from Uqbar, reports that the number of Brazilian debt recovery FIDCs (Credit Rights Investment Funds) increased from 140 in January 2024 to 157 in April 2026, with combined assets under management of BRL22.5bn.

JiveMauá is preparing a new fundraising round in the second half of the year, targeting several hundred million reais to capitalise on the growing pipeline of distressed credit opportunities. Meanwhile, Mobius Capital is launching its third fund, highlighting a significant increase in deal flow, particularly in agribusiness, where financial pressure is accelerating asset sales and restructuring transactions.

Banks are also stepping up the disposal of non-performing loan (NPL) portfolios as they seek to strengthen their balance sheets. According to NeoFeed, IOX Group estimates that the supply of NPL portfolios has risen by more than 50% in recent months, while Neo Investimentos continues to acquire heavily discounted consumer debt from banks and retailers.

The report concludes that Brazil’s distressed debt market still has considerable room for expansion, with specialist investors expecting opportunities to increase as elevated interest rates continue to weigh on corporate and consumer borrowers.

Original Story: Neofeed | Author: Guilherme Guilherme
Edition and translation: Prime Yield