The number of Brazilian consumers listed in credit default reached 63,29 million in May, reflecting a 2.78% year-on-year increase. Data by the Serviço de Proteção ao Crédito-SPC Brasil (credit protection services) and Confederação Nacional de Dirigentes Lojistas-CNDL (a retailer association) says that the Southeast region was the one recording the sharpest increase in consumers listed as defaulters in Brazil – a status that creates restrictions for buying on credit -, reflecting a growth of 8.07% in May. In the other regions, growth has been lower, with 2.95% in Northeast, 2.27% in Center-West, 1.55% in North and 1.08% in South.

Northern region has the highest rate of defaulters – 48% of adult population living in this region, or 5,8 million defaulters. Northeast region follows, with 17,45 millions of credit defaulters or 43% of adult population; Center-West, recording a 4,94 million listed defaulters (42% of population), Southeast, having 26,94 million defaulters (41% of population) and South, 8,15 million defaulters (36%).

Of total national 63,29 million defaulters, 17,9 million are aged 30-39 years.

Original Story: Agência Brasil
Photograph: Depositphotos
Translation and Edition: Prime Yield

Itaú Unibanco and Citi have placed up for sale portfolios of non-performing loans of companies, boosting the Brazilian NPL transaction markey over the 2nd quarter. With a market traditionally concentrating in NPLs in the household segment, the disposal of corporate portfolios is seen as an evolution, thus attracting specially international specialized funds, the so–called “vulture capital”. As for Itaú, the bank has launched into the market for sale about 40 companies undergoing judicial reorganization.

The institution has already received offers from two interested parties and expects to close the operation by July. No big case of corporate reorganization is included in this lot.

Citi, which has been focusing only on the corporate segment in Brazil after selling its retail operation to Itaú, is putting into the market some R$70 million in medium-sized company’s loans. This process is now at an initial stage. Citi and Itáu have both not commented on this information.

Original Story: Estadão/Economia (Coluna do Broadcast)
Photograph: Shutterstock
Translation and Edition: Prime Yield

Pension reform will be the“litmus” test of Brazil’s ability to bring its fiscal deficits under control and avoid unsustainable growth of its already high public debt, the Organization for Economic Cooperation and Development (OECD) said on Wednesday, 28th February.

In its annual survey of the Brazilian economy, the OECD said the streamlining of Brazil’s generous social security system was urgent because it costs 12 percent of GDP.

“Aligning Brazil’s pension rules with those practiced in OECD countries would imply a minimum pension lower than the minimum wage, with eligibility to some prorated pensions for shorter periods,” the survey said.

Brazil’s President Michel Temer failed to muster enough support for his pension reform proposal this month and it has been put off until after the October elections and will likely be left for the next government to deal with.

The OECD warned that if Brazil fails to reduce mandatory public spending and the government’s primary deficit is not turned to a surplus, the country’s debt relative to GDP“will continue to rise without bounds and not be sustainable.” Failure to comply with a spending cap introduced by the Temer administration, that limits real growth in public spending to the rate of inflation for 20 years, would undermine confidence in the Brazilian economy and trigger a return to recession.

“Successful implementation of the pension reform, without which the expenditure rule cannot be met in the medium term, will be a litmus test for the ability of the authorities to implement further structural reforms,” the survey said.

The OECD said higher volatility on financial markets related to a normalization of U.S. monetary policy could also present risks for Brazil, though its Central Bank has well managed bouts of volatility in the past.

Substantial reserves and an expected strong inflow of foreign direct investment would cushion any related exchange rate risks, the survey said.

The OECD sees the Brazilian economy growing by 2.2 percent this year and 2.4 percent in 2019, a lower forecast for next year than the government’s projection of 3 percent.

As Brazil puts its worst recession in decades behind it, inflation will creep up to 4.2 this year and next, from 3.9 last year, the OECD estimates.

Gross public debt, assuming that the current fiscal reform plan will advance, will rise to 77.1 percent of GDP this year and to 81.1 percent in 2018, according to the OECD’s forecast.

Original Story: Reuters – Anthony Boadle
Photograph: Depositphotos
Translation and Edition: Prime Yield

Brazil’s central bank chief Ilan Goldfajn said that Latin America’s top economy must somehow continue on the path of reforms to maintain low inflation and a sustainable economic recovery.

Goldfajn also said that the central bank expects a solid economic recovery this year with inflation reaching goals, though he warned of risks. President Michel Temer last week gave up pension reform ahead of October’s presidential elections, a legislative setback that prompted Fitch to cut Brazil’s credit rating further into junk territory.

The NPL ratio of the Bank in Portugal is 7.5%, decreasing 1 percentage point compared to 2016. Now this indicator figures 392 million euros.

Original Story: Reuters
Photograph: AFP
Translation and Edition: Prime Yield