NEWSLETTER – August 2026
08/03/2026
CENTRAL BANK EXPECTED TO CUT RATES TO 14%, LEAVE DOOR OPEN TO MORE EASING
Inflation and economic activity data support another quarter-point cut, with policymakers expected to lower benchmark rate for a fourth consecutive meeting
The latest round of economic activity and inflation data has strengthened market confidence that the monetary easing cycle will continue, with expectations for another quarter-point cut—bringing the Selic, Brazil’s benchmark interest rate, to 14%—virtually unanimous among the 113 banks, asset managers and consultancies surveyed by Valor.
In addition to collecting forecasts, Valor interviewed economists from institutions that ranked among the Top 5 in the Central Bank’s most recent Focus survey for short-term Selic projections, covering the second quarter. While the prevailing view is that recent data and the Monetary Policy Committee’s (Copom) communication point to another cut at next Wednesday’s meeting, there’s less conviction about how long the easing cycle will last, given risks stemming from both the domestic and external outlook.
Of the 113 institutions that shared their expectations, only three don’t expect a 25-basis-point cut this week: Citi, Pantheon Macroeconomics, and Suno Research. Beyond August, 46 expect the easing cycle to end either at next month’s meeting or immediately after this week’s, while 64 expect at least one additional cut between September and December.
Barclays chief economist for Brazil Roberto Secemski has for some time expected a 25-basis-point reduction this week and believes developments in economic variables since the June meeting have reinforced that call. In his view, the Central Bank already signaled a preference for continuing the easing cycle in June by extending the relevant policy horizon earlier than the current institutional framework would suggest (18 months), citing the estimated effects of El Niño on prices. The latest sequence of inflation and activity data, he adds, also supports continued calibration of the degree of monetary restraint.
“Indeed, since the last meeting, most data have come in weaker than expected, although not to the extent that the risks to inflation converging to target have disappeared. We’re still operating in an environment that calls for caution,” Secemski says. He notes that the recent improvement in headline inflation owes largely to a reversal in at-home food prices, and that the easing in core inflation has been driven mainly by specific items, while labor-intensive services inflation reached a nine-year high, rising 7.3% year over year.
On Copom’s communication, the Barclays economist doesn’t expect the Central Bank to close the door to further cuts, nor to openly endorse another 25-basis-point move. “I believe the message will be ‘agnostic’ regarding future decisions, meaning Copom will stay data-dependent. My expectation, however, is that the balance of risks will continue to be tilted to the upside, though it’s not clear to me whether that will appear in the statement or only in the minutes, as happened at the previous meeting.”
BV chief economist Roberto Padovani also expects a statement that offers no guidance on the Central Bank’s next moves, leaving the door open to either further easing or a pause beginning in September.
“Given the high degree of uncertainty, the Copom will continue to avoid committing to its next steps. That’s been the approach adopted by central banks in general,” he says.
Padovani also expects another cut to 14%, pointing not only to the Central Bank’s “preference” for continuing to lower rates but also to recent data supporting that scenario—particularly July’s IPCA-15 inflation reading, which he views as an important sign that inflation continues to converge toward target, albeit slowly. Weaker economic growth is also expected in the near term.
“With weaker activity and inflation converging, this calibration makes sense from the Central Bank’s perspective. Monetary policy will remain tight, but to a lesser degree.”
Daycoval chief economist Rafael Cardoso also expects the Copom to cut the Selic by 25 basis points on Wednesday and to refrain from providing guidance for the next meeting, keeping alive the possibility of another cut in September.
“When we update our model assumptions, inflation projections for the new relevant horizon—the first quarter of 2028—should change very little from previous estimates and remain around 3.2%. If that proves correct, and the model incorporates the rate path embedded in the Focus survey, there may be room for another 25-basis-point cut. That’s not our base case, and conditions would have to evolve favorably for it to happen, but the probability isn’t zero,” he says.
Daycoval’s baseline scenario has the Central Bank pausing once the Selic reaches 14%.
“In our assessment, the probability of another cut in September is still a minority scenario. If the decision brings any surprises—a lower inflation forecast, say, or comments suggesting a September cut has become the likelier outcome—we may revise our view. But for now, we see this as the pause cut,” he says.
Having ranked among the Top 5 in several Focus survey categories in recent months, Linus Galena economist Ricardo Meirelles de Faria holds a more optimistic view, arguing that the current level of rates is excessively restrictive despite highly expansionary fiscal policy.
“I personally expect 25-basis-point cuts at each of the next four meetings, even with the back-and-forth developments in the war with Iran,” he says.
The economist notes that much of the market was disappointed by Copom’s June meeting, despite a cut having been widely priced in. In his view, part of that frustration stemmed from the Central Bank’s “clumsy” communication.
“I believe the communication will now be similar in substance, but I expect the Central Bank to be more careful when discussing inflation’s convergence toward target over the relevant horizon,” Meirelles says, adding that Copom may leave the door open to another cut at its September meeting.
“When we look at activity data and the IPCA, there’s room to bring the Selic down a bit further. Real interest rates are still very high, and in that sense, I know I’m somewhat outside the consensus,” he says, projecting the benchmark rate at 13.25% by year-end. “Obviously, a lot can happen, and we’ll have to monitor the elections, but the feeling is that some of that is already reflected in market prices.”
Parcitas Investimentos chief economist Vitor Martello also expects a 25-basis-point cut at Wednesday’s meeting and believes the odds of another cut of the same size in September are rising.
“Will it signal anything about September? We don’t think so. This Central Bank doesn’t usually make decisions in advance, especially in an environment of elevated uncertainty. The strategy should continue to be monitoring data on aggregate demand, economic activity and inflation—particularly core inflation—and making the decision considered most appropriate at each meeting. In our view, that decision would be to cut another 25 basis points next week and then stop at 14%,” he says.
“Our assessment is that the Central Bank is gaining, not losing, confidence in its baseline scenario—one of inflation remaining under pressure but gradually converging toward target, with high rates being transmitted through the economy, which the data are confirming,” he says.
Looking beyond August, BV’s Padovani believes the ideal approach is to pause the easing cycle amid a macroeconomic environment filled with uncertainty. “I think a pause makes sense now, and as the dynamics of inflation become clearer, the process of cutting rates could resume at some point in 2027,” he argues.
Among the factors that still need greater clarity, the economist cites the dollar’s behavior through year-end, the likely effects of El Niño on food inflation, and market perceptions of fiscal policy following the presidential election.
Source: Valor International
https://valorinternational.globo.com/
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08/04/2026
HAVANNA’S BRAZIL OPERATOR JOINS GROUP IN OUT-OF-COURT RECOVERY
Café del Plata claims companies operate in an integrated manner, share guarantees, have common control, and maintain financial relationship among themselves
Café del Plata, responsible for operating Argentina’s Havanna chain in Brazil, is part of a group of companies that has requested a São Paulo court to approve an out-of-court restructuring plan to renegotiate R$127 million in debts with financial creditors. The move adds to the growing list of companies turning to the courts to tackle financial difficulties.
According to documents obtained by Valor, the request also includes Aeger Comercial e Importadora, Casma do Brasil, Delfos Comércio de Perfumes e Cosméticos, DGA Doces del Plata Administradora de Franquias, and Fly Shopping Comércio de Perfumes, Alimentos e Artigos de Presente.
The petition explains that the companies operate in an integrated manner, share guarantees, have common control, and maintain financial relationships among themselves. Hence, they advocate for a joint restructuring.
When reached for comment, Havanna Brasil stated that the process arises from “obligations contracted by other companies within the shareholder group of Havanna, unrelated to operational or financial issues” of the network. However, it emphasized that the company is jointly liable for the group’s debts. According to the company, the out-of-court restructuring aims to prevent these obligations from affecting its operational capacity and its commitments to suppliers, franchisees, and partners.
This joint liability means, in practice, that the food operation is responsible for debts incurred by companies in other segments of a group that has been active for over 30 years in cosmetics, perfumery, personal hygiene, and food.
In the petition, the companies claim that Café del Plata is not facing an economic or financial crisis on its own. They maintain that its activities “are continuously growing and gaining more space in the Brazilian market.”
However, the company was included because its operations and guarantees are said to be interconnected with those of the other companies. According to the request, its exclusion “would render the complete restructuring of the activity unfeasible.”
This claim of growth contrasts with the scenario described by the company itself to Valor in an interview before the process became public. Havanna Brasil postponed its target of reaching 500 stores in the country from 2026 to 2028 and reduced its revenue projection for this year from R$500 million to R$450 million. The R$500 million mark is now expected in 2027.
At the time, Adriana Villela, co-founder and growth director of Havanna Brasil, attributed the revision to the retail sector’s performance and the greater caution of franchisees.
“This year we had to survive. I would like to invest more, but it’s impossible,” she told Valor then. Villela also mentioned the holiday calendar, which reduced foot traffic in shopping malls, and investors’ caution due to the FIFA World Cup and elections.
Villela identified occupancy cost as the main challenge for the operation. “The biggest problem today is rent. The occupancy cost has become very high,” she said. According to her, the billing model of the enterprises needs to keep up with the changes in retail.
The diagnosis aligns with the one presented to the court. While explaining the financial deterioration of the other companies, the group states that more than 90% of its sales points are in shopping centers, a segment that has experienced a flow reduction in recent years. At Havanna, the concentration is even greater: nearly 97% of the 250 units are located in such establishments.
The petition also cites the effects of the pandemic, which led to increased indebtedness to finance operations and support clients and franchisees. Subsequently, defaults and rising interest rates increased cash flow pressure.
According to the companies, a significant portion of the debts was contracted when the Selic policy rate was below 3%. The subsequent cycle of monetary tightening, with interest rates above 12%, raised financial expenses.
Havanna’s expansion in Brazil is almost entirely through franchises. Of the 250 units, only three are company-owned and function as training stores.
In the first half of the year, the network sold 163 new franchises, although some are still awaiting approvals in shopping malls and airports. In the same period, according to the company, more than 30 operations were opened.
Investments range from R$180,000 in the Express model, of 8-square-meter stores, to over R$500,000 in cafes and hybrid units. Ice cream parlors require investments starting at R$400,000. The average return period reported by the company is 18 to 24 months.
When asked about the debt amount attributable to Café del Plata, the communication of the process to franchisees, and the Argentine headquarters’ knowledge, the company did not respond.
In a statement sent to Valor, the chain declared that the business “is in strong expansion” and maintains the plan to reach more than 700 points of sale in different formats by 2030 in Brazil. This target differs from the one previously presented to Valor, which aimed for 500 stores by 2028.
The company also intends to expand product categories with dulce de leche and advance the brand’s distribution in the food retail sector.
The Brazilian operation will celebrate its 20th anniversary in 2026 and is the largest Havanna network worldwide in terms of store numbers. It is also used by the headquarters as a format laboratory. Of the 250 units, 90 are of the “heladeria” or hybrid model, combining cafe and ice cream parlor.
Source: Valor International
https://valorinternational.globo.com/
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08/04/2026
PETROBRAS WEIGHS OFFSHORE LNG EXPORTS AS GAS MARKET REFORMS ADVANCE
Oil giant studies offshore liquefied natural gas facilities as proposed gas market reforms could require it to sell part of domestic output to rivals
Petrobras will begin studying the feasibility of investing in offshore liquefied natural gas (LNG) facilities to export part of Brazil’s natural gas production, according to sources familiar with the matter.
The move comes amid discussions over the Gas Release program, provided for under Brazil’s New Gas Law, which aims to expand private companies’ access to the natural gas market. The initiative, which still requires regulation by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), would require a dominant market player to sell part of its natural gas production to competitors in an effort to increase competition. The proposal is on the agenda for the agency’s next board meeting on Friday (7).
If those restrictions on Petrobras’s market position are adopted, the oil giant is considering directing investments abroad. “As the Gas Release program is currently designed, it does not create a single additional molecule of gas. It simply shifts market share from the state-owned company to private players,” a source close to Petrobras told Valor.
Petrobras announced on Monday (3) its third natural gas discovery in Colombia. If all three discoveries produce the expected volumes, the Brazilian company’s Colombian output will be comparable to production from the main phase of the Sergipe Deepwater Project (SEAP) in Brazil’s Sergipe-Alagoas Basin.
The project in northeastern Brazil is considered key to expanding Petrobras’s gas production. It includes two offshore platforms and a 134-kilometer gas pipeline. SEAP I will have the capacity to process 10 million cubic meters of natural gas per day, while SEAP II is expected to process up to 12 million cubic meters per day.
Petrobras’s Colombian operations do not currently include plans to export gas, although that remains a future possibility. Bringing Colombian gas to Brazil, however, would require Brazil’s regulatory framework to remain unchanged, the source said. Combined, the three discoveries could supply Colombia’s domestic market for 10 years, ensuring the country’s self-sufficiency in natural gas. Petrobras has operated in Colombia for 39 years and is the operator of the GUA-OFF-0 Block consortium, holding a 44.44% stake alongside Colombia’s state-owned Ecopetrol, which holds the remaining 55.56%.
The project is expected to require investments of $1.2 billion during the exploration phase and $2.9 billion for field development. Production is projected at 13 million cubic meters of natural gas per day over 10 years. First gas is expected in 2030, subject to the issuance of all required permits and licenses.
The latest discovery, announced Monday (3), was made at the Sandia-1 exploratory well, located in the same block as the previous two discoveries. Drilling began on June 12 and reached its final depth on June 29, confirming the presence of hydrocarbons. The well is located 42 kilometers off Colombia’s coast in ultradeep waters with a water depth of 1,251 meters.
Petrobras’s expansion in Colombia’s natural gas market has been supported by regulatory reforms in that country aimed at strengthening domestic supply and reducing the risk of shortages. Among the changes was the introduction of long-term firm gas sales contracts, which made the project economically viable.
According to the source, the latest discovery also strengthens Latin American energy integration, which could enter a new phase if Colombian gas is eventually exported. Petrobras already imports natural gas from Bolivia through the Brazil-Bolivia Gas Pipeline (Gasbol) and from Argentina.
Source: Valor International
https://valorinternational.globo.com/
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08/05/2026
U.S. REVOKES BRAZILIAN AMBASSADOR’S VISA AMID DIPLOMATIC DISPUTE
Washington says move responds to Brazil’s refusal to grant visas to two U.S. diplomats and delay in approving ambassador nominee
The United States on Tuesday (4) revoked the visa of Brazil’s ambassador to Washington, Maria Luiza Ribeiro Viotti. U.S. officials said the move was retaliation for Brazil’s decision to deny visas to two American diplomats and for its failure to approve Washington’s nominee for ambassador to Brasília. In response, Brazil’s Presidential Communications Secretariat (SECOM) said the justifications were false and argued that the decision made “clear the unwarranted interest” of the United States “in interfering in Brazil’s next presidential election” in October.
Announcing the decision, the U.S. State Department said the measure was a reciprocal response to Brazil’s actions and that it had postponed the move several times to allow President Lula to reverse course, which it said he had not done.
U.S. officials added, however, that the visa revocation could be quickly reversed if Brazil took what they described as the appropriate steps and accepted President Donald Trump’s nominee for the U.S. Embassy in Brasília. Trump nominated Florida House Speaker Daniel Perez.
Another State Department official, speaking to reporters on condition of anonymity, said the Brazilian ambassador’s visa would be reinstated once the dispute is resolved. The official also stressed that revoking the visa does not amount to expelling the diplomat. She may remain in the United States, but without a valid visa.
Still, the official said indications are that Lula’s government will not resolve the issue before October’s election. Perez’s nomination was announced publicly by the Trump administration in June. It has been approved by the U.S. Senate Foreign Relations Committee but still requires confirmation by the full Senate before he can take up the post in Brasília, provided Brazil also grants its approval. Confirmation requires a simple majority of the 100-member Senate. The host country’s approval, known as agrément, is the diplomatic procedure by which an ambassador is formally accepted and is typically considered a formality.
SECOM argued, however, that the agrément process is confidential and that “the designated nominee’s name should only become public after consent has been granted,” as provided for in Article 4 of the Vienna Convention on Diplomatic Relations.
“The United States government publicly announced the name of its nominee before formally requesting agrément from the Brazilian government. Brazil is abiding by international law. The Vienna Convention establishes no deadline for granting agrément. The U.S. request is still under review,” the statement read.
Beyond the dispute over Perez’s nomination, Brazil’s Foreign Ministry last month denied visas to Riley Barnes, U.S. Deputy Assistant Secretary of State for Democracy, Human Rights, and Labor, and one of his senior advisers, Samuel Samson. The visas were denied after The Washington Post reported that the two planned to travel to Brazil to question the integrity and reliability of the country’s electoral system.
The State Department rejected those accusations, saying the two officials had planned to visit Brasília between July 27 and 30 to meet with government officials, religious leaders, and others to discuss “election integrity” as well as religious freedom and freedom of speech.
“Our diplomats were prevented from carrying out the routine and customary work conducted between our two countries. Under those circumstances, after a lengthy delay and without any indication that the agrément impasse would be resolved, we adopted a reciprocal measure against a Brazilian diplomat,” the State Department official said.
In response, SECOM said the two officials “planned to visit the country to cast doubt on the integrity of Brazil’s electoral system, in an unacceptable attempt to interfere in the national political process.”
SECOM also noted that sanctions against Brazilian officials remain in effect, “including the cancellation of visas” to the United States, based on what it described as the “unfounded allegation of political persecution” of former President Jair Bolsonaro. Those affected include Federal Supreme Court (STF) justices and senior members of the executive branch.
“The Brazilian government spared no effort to resolve these differences,” SECOM said. “During his visit to Washington in May, among other issues, President Lula asked President Trump to lift the individual sanctions.”
For that reason, SECOM said Tuesday’s decision was not “an isolated incident,” but rather “part of a deliberate escalation of hostile measures against Brazil, driven by ideological reasons incompatible with a bilateral partnership that has always been based on mutual respect.” It added: “It also makes clear the unwarranted interest in interfering in the next presidential election.”
Tensions between the two countries escalated again in July, when the Trump administration imposed a 25% tariff on a range of Brazilian exports, citing alleged unfair trade practices following an investigation under Section 301 of the Trade Act. Brazil formally rejected the allegations.
Lula also denounced the tariffs as an attack on Brazil’s sovereignty and accused Senator Flávio Bolsonaro (Liberal Party), his main opponent in October’s presidential election, of lobbying in Washington for the measures to be imposed. Lula also warned Trump not to meddle in Brazil’s elections.
Last week, the Trump administration also extended for one year an executive order signed in June 2025 imposing a 50% tariff on Brazilian products. The measure has no practical effect because the U.S. Supreme Court suspended the 50% tariffs, ruling that Trump had exceeded presidential authority by invoking an emergency to impose the trade measures.
In the executive order extending the measure, the White House made a series of allegations against Brazil. It said Brazil engages in practices that interfere with the U.S. economy, infringe on the free speech rights of American citizens, violate human rights, and undermine U.S. interests in protecting its citizens and companies. It also accused members of the Brazilian government of “politically persecuting a former president, his family, and his supporters,” referring to former president Jair Bolsonaro, who is serving a prison sentence after being convicted by the STF for attempting a coup.
One week after imposing the 25% tariff, the United States also levied a 12.5% tariff on Brazil and 59 other countries, citing alleged failures to prevent the import of goods produced with forced labor.
Despite revoking the ambassador’s visa, the State Department official said Washington attaches great importance to its relationship with Brazil and respects the Brazilian people and whichever government they choose through free and fair elections. SECOM likewise said that, “in line with its diplomatic tradition, the Brazilian government opposes the logic of confrontation and reaffirms its commitment to dialogue and negotiation in all of its international relations.”
(With international press agencies)
Source: Valor International
https://valorinternational.globo.com/
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08/05/2026
NATIONAL JUSTICE COUNCIL HARDENS PENALTIES FOR JUDGES
CNJ approves proposal making removal from office the maximum penalty for judges, instead of forced retirement
The National Justice Council (CNJ) on Tuesday (4) approved a proposal regulating removal from office as the maximum disciplinary penalty for judges. The measure, drafted by council member Ulisses Rabaneda, was introduced in June in compliance with a ruling by the Supreme Court (STF) that abolished mandatory retirement as an administrative sanction that could be imposed on judges.
Mandatory retirement had long been the target of criticism because it allowed disciplined judges to leave office while continuing to receive pay.
The proposal had been introduced in June, but its consideration was suspended to allow discussions with judicial associations. At Tuesday’s plenary session, council members heard oral arguments from representatives of those organizations and adopted a revised version containing adjustments to the transitional rules governing implementation of the resolution.
The new resolution takes effect on the date of its publication and will also apply to pending cases. It will not apply, however, to disciplinary administrative proceedings (PADs) or disciplinary review proceedings that have already been finally concluded.
Organizations representing members of the Judiciary had requested that the new sanction’s pension rules also be specified. The rapporteur, however, concluded that the issue should not be addressed through a CNJ regulation but rather decided on a case-by-case basis by the competent courts. He also argued that other “gaps” left by the resolution, such as procedural rules, should be resolved by the STF and that the council was merely complying with the Court’s ruling.
The resolution approved by the CNJ changes the rules governing disciplinary administrative proceedings against judges and the applicable penalties. Under the proposal, mandatory retirement is eliminated as a disciplinary sanction and replaced by removal from office. The other penalties currently provided for remain in force: warning, reprimand, compulsory transfer, compulsory leave, and dismissal of judges who do not have life tenure.
According to the resolution, the penalty of removal from office may be imposed on judges who seriously violate their official duties, engage in conduct incompatible with the dignity, honor, and decorum of judicial office, demonstrate an inability to perform their duties, or display performance incompatible with the responsibilities of the Judiciary.
The penalty may also be imposed on judges who engage in activities incompatible with judicial office, receive payments related to cases under their jurisdiction, or participate in partisan political activities.
When a disciplinary administrative proceeding concludes that the penalty should be imposed, the judge will be immediately removed from judicial duties and will receive compensation proportional to the length of pension contributions until the proceeding reaches a final, unappealable judgment. During that period, the court must declare the position vacant and take steps to fill it.
In cases decided by courts or by the superior councils of the Labor Court system and the Federal Court system, the decision must be forwarded to the CNJ for review after all appeals have been exhausted. When the judge under investigation is a member of a superior court, the review will be conducted by the National Inspector of Justice.
If the CNJ upholds the penalty, the case will be referred to the Office of the Attorney General (AGU), which will have up to 30 days to file an action before the STF seeking the judge’s removal from office. The Supreme Court will then decide the case and determine whether to impose the sanction on a final basis.
At the same plenary session on Tuesday, STF and CNJ Chief Justice Edson Fachin also introduced a proposal aimed at preventing conflicts of interest within the Judiciary. Consideration of that resolution, however, was suspended for 60 days to allow courts, judicial councils, and judges’ associations to submit comments on the proposal.
After that discussion, the initiative will be placed on the agenda for consideration by the council members. If approved, the measure will establish guidelines for all levels of the Judiciary. The only exception is the STF, which is not subject to the CNJ’s oversight.
In broad terms, the proposal identifies situations requiring judges to exercise “special attention,” such as participation in events, conferences, seminars, and academic activities funded or predominantly funded by private companies. It also addresses the receipt of gifts, benefits, or other advantages, as well as family or professional relationships “capable of creating conflicts of interest.”
According to the proposal, judges and court employees in such situations must comply with transparency requirements regarding funding sources and the extent of expenses covered. Courts may also establish mechanisms requiring the disclosure of such interests, and academic activities must remain compatible with judicial duties and judicial independence.
Source: Valor International
https://valorinternational.globo.com/
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08/10/2026
BRAZILIAN FARMERS ADJUST PLANS TO FACE STRONGEST EL NIÑO ON RECORD
Brazilian crops could see soybean planting delayed, affecting the sowing window for the second corn crop; coffee and citrus may also be affected
In the 2026/27 crop year, Brazil’s agribusiness sector is expected to face the strongest El Niño on record, considering events documented since 1950. The last El Niño to receive a “very strong” classification, like the current one, was in the 2015/16 crop year, when 16 different crops suffered productivity losses. It was active from 2014 to 2016.
The climate pattern, which began in June this year, is developing more rapidly and is expected to peak between November and January 2027—with no exact forecast yet for when it will end. Experts consulted by Valor believe that, if a lack of rain and high temperatures materialize in the country’s Center-North, soybean planting could be delayed and yields could fall.
Guilherme Bastos, coordinator of FGV Agro, says irregular rainfall at the beginning of the season could delay planting or require the oilseed to be replanted. In 2024, which was also an El Niño year, 2.9 million hectares had to be replanted because of weather conditions. If the situation is repeated, late soybean sowing could compromise the ideal planting window for the second corn crop. In his view, the prospect of a strong El Niño makes sound crop planning and the purchase of agricultural insurance even more crucial.
Ana Luiza Lodi, a market intelligence analyst at Stonex, notes that if planting is delayed but weather conditions subsequently allow sowing, there would be no major damage to yields. From a market perspective, in the event of a significant crop failure in Brazil and Argentina, for example, prices could rise, as local and global supply-and-demand balances would become tighter.
“Currently, the focus is on the United States, amid some forecasts of excessive heat. If there is any significant problem in the United States, prices could already react even before the South American crop has been determined,” the analyst says.
In southern Brazil, where the phenomenon usually brings above-average rainfall, the concern is excessive precipitation during the establishment of summer crops. “The impact could even be positive for soybean and corn yields in Rio Grande do Sul, as long as the rain is not excessive, as it was in 2024,” says agrometeorologist Ana Maria Heuminski de Ávila, of Unicamp’s Center for Meteorological Research and Applied Climate Studies in Agriculture (Cepagri).
Agrometeorologist Marco Antonio dos Santos of Rural Clima highlights the importance of soil management in dealing with periods of excess or insufficient water. “He [the farmer] first has to do what we call his homework: maintain good crop residue, keep the soil with good plant cover and good chemical and physical structure, so that when it rains, the water can penetrate the entire soil and form a larger layer of water,” he says.
Characterized by an increase in the temperature of Pacific Ocean waters, El Niño has occurred many times. However, as the planet warms, the phenomenon has become increasingly intense and frequent, says Marcelo Seluchi, general coordinator of Operations and Modeling at the National Center for Monitoring and Early Warning of Natural Disasters (Cemaden), which is linked to the Ministry of Science, Technology and Innovation.
“El Niño is a recurring phenomenon; the issue is that it is becoming increasingly recurrent. Over the past 60 years, there have been more cases, and more intense ones, than in the previous 60 years,” he says. In Brazil, the phenomenon typically increases rainfall in the South and causes drought in the Center-West, North and Northeast.
For Eduardo Assad, a researcher at FGV Agro’s Bioeconomy Observatory, recent episodes of the phenomenon provide a basis for estimating that significant losses could occur in agriculture. According to him, in 2015 and 2024, the phenomenon caused losses of up to 10% of the crop.
Eduardo Martins, director of the Sustainable Agriculture Associated Group (GAAS), sees a risk of even greater damage to soybean production, for example. “If the lack of rain increases, affecting Matopiba [the convergence of Maranhão, Tocantins, Piauí and Bahia] and the Center-West, there is a possibility of 20% losses in the country,” estimates Martins, who served as president of the Brazilian Institute of the Environment and Renewable Natural Resources (Ibama) under the government of Fernando Henrique Cardoso.
Coffee at risk
In addition to grains, some of Brazil’s main perennial agribusiness crops could also suffer losses from the effects of El Niño in the 2026/27 crop year. Coffee and citrus, for example, are among the crops most vulnerable to a combination of intense heat and water deficits, as projected for the season.
According to Eduardo Assad, a researcher at the Bioeconomy Observatory of FGV Agro’s Agribusiness Studies Center, from a physiological standpoint, soybeans and corn are the crops most exposed to risks, but in the Southeast, oranges and coffee are the most sensitive crops. “The forecast is for very strong heat waves and low precipitation. [This could lead to] coffee flower abortion and a loss of water supply for oranges,” he says.
Not all crops are expected to suffer losses. When El Niño occurs, sugarcane fields in the Center-South region typically benefit from increased rainfall and a more even distribution of precipitation, says Fabio Marin, a professor in the Department of Biosystems Engineering at Esalq/USP.
“In El Niño years, especially when the phenomenon is strong, production [of sugarcane] in the Center-South is normally above average,” he says. The main risk, the professor says, is concentrated in harvesting, since excessive rain can make it difficult for machinery to enter fields, delaying the processing of the raw material.
El Niño also alters weather conditions in countries that compete with Brazil. This is the case with India, one of the world’s largest sugar producers, which could face a water deficit during the monsoon rainy season, notes Guilherme Palhares, an analyst at Santander.
Source: Valor International
https://valorinternational.globo.com/
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08/10/2026
CENTRAL BANK MULLS LINKING PIX TO FOREIGN INSTANT PAYMENT SYSTEMS
Brazil’s monetary authority also mulls using future flows as credit collateral and is monitoring cross-border models being implemented by private agents
Brazil’s Central Bank announced on Monday (10) that it is considering connecting Pix, the country’s instant payment system, with similar platforms of foreign institutions. The monetary authority said it is monitoring cross-border transaction models being implemented by private agents in partnership with institutions from other jurisdictions.
According to the second edition of the Pix Management Report, released Monday (10), these cross-border transaction models are already enabling Brazilians to use Pix in other countries and for non-residents to use Pix in Brazil through apps from foreign institutions.
The Central Bank says the interconnection of instant payment systems has the potential to reduce fees, increase speed, expand access, and improve the transparency of cross-border transactions.
“Both bilateral interconnections and participation in multilateral hubs are under discussion. These connections would allow for international remittances and purchase transactions with funds available in local currency within seconds,” it highlighted.
The Central Bank is also exploring the integration of Pix into Brazil’s debt market, with the possibility of using future Pix flows as collateral in credit operations.
“The initiative aims to enable information and flows originating from the Pix ecosystem to support the financing of economic activities,” the Central Bank said in the report.
According to the monetary authority, the solution could contribute to improving the quality of collateral and reducing the cost of credit, especially for companies with heavy use of Pix. The Central Bank noted that it is monitoring the solutions developed by private agents to offer credit operations during the initiation of a transaction, allowing customers to split payments and transfers via Pix.
The Central Bank is also seeking to integrate “tax split” into transactions conducted through Pix.
Better known as “split payment,” the mechanism created in the tax reform will automatically settle and distribute taxes. The consumption tax reform introduced the Goods and Services Tax (IBS) and the Contribution on Goods and Services (CBS). The split payment mechanism automatically and immediately retains and collects IBS and CBS at the exact moment of the financial settlement of a sale (whether by Pix, card, or transfer), directing the tax portion directly to the tax authority’s account and crediting only the net balance of the operation to the seller’s account.
The Central Bank said that it is monitoring and evaluating the necessary adjustments to the functioning rules and infrastructure of Pix to enable this functionality.
Source: Valor International
https://valorinternational.globo.com/
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08/11/2026
PUBLIC DEBT REDUCES SPACE FOR PRIVATE DEBT, PRESSURES INVESTMENTS
Scenario reduces and increases the cost of resources available for the capital market
Public debt remains on the rise and crossed an important threshold this year: reaching 77.2% of GDP in April, it surpassed the share of private-sector debt, which includes households and companies, at 75.7% in the same month, according to a report by the Center for Studies on the Financing of Brazilian Companies (Cefeb) at the Institute for Economic Research Foundation (Fipe).
The development revealed a classic phenomenon in macroeconomics, “crowding out,” or the displacement effect, in which the public sector absorbs an increasingly larger share of available savings and financial-market resources to roll over its liabilities. Because the government is the lowest-risk borrower, it “pushes” the private sector out of capital markets and makes credit for productive investment more expensive.
Roberto Troster, coordinator of Cefeb and the study’s author, says the figures are a warning sign because they lead to a vicious dynamic. “The government demands more resources, and this raises the risk premium and interest rates for those taking out financing,” he says.
The study provides an X-ray of the mechanism through which monetary policy is transmitted to credit in the country and calculates a 0.97 correlation between the average funding cost of the federal government’s domestic marketable debt and that of private debt, indicating an almost symmetrical alignment. When the government finances itself at a higher cost, the private productive sector immediately feels the impact, Troster says. In this way, he argues, the state acts as the financial market’s “anchor price.”
At the same time, in the economist’s assessment, credit policy is poor and based on short-term operations, which increases defaults. As payment delays continue to rise, the supply of credit contracts and banks tighten lending criteria. Companies tend to shelve expansion plans as they seek to deleverage and improve operational efficiency.
“Fiscal policy has lost any countercyclical character,” says Carlos Kawall, a former secretary of Brazil’s National Treasury and founder of asset manager Oriz. “It is expansionary by definition, regardless of whether the economy is doing poorly or well, especially because it is doing well, with low unemployment.”
The study uses Gross General Government Debt (DBGG) as its basis, which includes the federal government (including the National Social Security Institute, or INSS), states and municipalities. Through the end of 2025, according to the report, public and private debt were growing in parallel, showing an economy becoming more leveraged. “In April 2026, the divergence becomes explicit. Public debt shoots up to 77.2%, while private debt falls to 75.7%.”
Troster says the last time the “crowding out” phenomenon occurred was under the government of Dilma Rousseff, between 2014 and 2016. However, the impact on the private sector now is likely to be much more dramatic because the country has never had a capital market that was as relevant to companies’ liabilities. According to the Cefeb study, the segment’s share of the debt of publicly traded companies rose from 14.8% to 22% between 2022 and 2026, while the share of bank credit fell from 38.4% to 31.2%, indicating a structural shift in companies’ sources of financing.
Kawall points out that investors are on the other side of these issuances, including a large number of individual investors. “We do not have this previous experience in Brazil, but international experience shows that the effect on how the economy functions tends to be amplified because it is more widespread,” he warns. According to him, a banking crisis generally remains more contained and under the control of the Central Bank. However, he notes that between 2023 and 2025, the country experienced a “crowding in” movement, with the “boom” in the private debt market, which largely replicates the public debt’s indexing structure, with securities linked to the CDI and IPCA.
The former Treasury secretary says it is “concerning” to see the government moving toward “crowding out.” It is, he says, a model that consistently depends on increasing the stock of public debt, but that has also used higher revenues to finance itself, through measures such as increasing the IOF financial transactions tax and taxing exclusive closed-end funds.
Economic growth, he assesses, was not enough to absorb the increase in spending, particularly mandatory spending, with the adjustment of the minimum wage and the reindexation of health care and education expenditures. Kawall points out that, when the fiscal framework was introduced in 2023, experts were already warning that it did not guarantee the sustainability of the debt trajectory.
Long-term issuance loses steam
Because the economy grew more than expected, the debt trajectory has not been explosive so far. Kawall notes that the request submitted to the Senate at the end of July for authorization to expand the capacity for sovereign borrowing abroad, proposing to replace the current cumulative ceiling of $100 billion with $35 billion, shows that the Treasury needs to broaden its investor base because of the growing difficulties with longer-term issuances in Brazil. The share of foreign-currency debt would rise from the current 3.8% of total debt to 7%.
“Even with the growth of recent years, the credit market is small compared with the needs of the private sector, while the state is too large. Government debt has grown much more than private debt,” says Jeferson Bittencourt, head of Macroeconomics at ASA Investments and also a former secretary of the National Treasury. He explains that there is the structural problem of Brazil’s low level of savings and the cyclical problem, which is fiscal stress.
The country’s savings, Bittencourt says, are made up of households, companies and the government. “What contribution does the government make to these savings? None; it generates negative savings, consuming other people’s savings, paying high interest rates, over short terms and with a low risk assessment.” Therefore, he says, “crowding out” manifests itself in higher interest rates and shorter terms for the private sector.
The largest companies can still issue debt in the capital markets, at an average cost of 13.68% for debentures, according to the Cefeb report, but smaller companies face greater restrictions, leaving them dependent on bank credit, at an average cost of 18.40% for legal entities, or investment funds in receivables (FIDCs). The difference, the study shows, reached 4.53 percentage points in April, the date of the data analyzed. “Issuing debt at this cost imposes a line of value destruction on most sectors of the real economy,” Troster says.
The effects of this asymmetry are showing up in companies’ financial health. The default rate among legal entities reached 4.8%, a historic peak: among micro and small companies, the rate reached 6%, while it remained at 0.5% among large companies. The number of companies with negative credit records also increased, rising from 6.66 million in January 2024 to 8.96 million in April this year, a 34.5% increase. Meanwhile, the difference between corporate and sovereign borrowing costs, according to Cefeb, remained reasonably stable between January 2022 and April 2026, generally fluctuating within a range of 2.5 to 4.5 percentage points.
Subsidies guaranteed to certain sectors worsen the problem, Bittencourt says, because they are shielded from monetary policy and end up putting further pressure on interest rates. The provision of cheaper credit to certain sectors is also cited by professor Carlos Pedroso, former chief economist at MUFG Bank Brasil, who notes that the presence of the Brazilian Development Bank (BNDES) has been growing again. He expects lower GDP growth next year, a scenario that would only be avoided if there is an adjustment in the public sector.
In an interview with Valor, the executive secretary of the Ministry of Finance, Rogério Ceron, declined to comment specifically on the Cefeb study but offered a conceptual assessment of “crowding out.”
For him, longer-term rates have three components: rising interest rates around the world, over which Brazil has no control; the trajectory of fiscal policy in Brazil; and the large supply of tax-exempt securities, which puts pressure on the placement of government bonds. “We want a country with lower interest rates; that is a consensus. How do we do that? We need to start dismantling [the two components over which we have influence].”
According to Ceron, on the fiscal side, it is necessary to “send the signals needed to remove the risk premium from the curve resulting from uncertainty.” Regarding tax-incentivized securities, a subject the Finance Ministry has raised repeatedly, he advocates a broad debate because, given the strong growth in issuances, the volume is incompatible with the country’s long-term savings and the situation “is not healthy.”
For the secretary, “someone has to give”: “Either the Treasury itself has to extend the process of seeking the optimal composition of the debt or, on the other hand, these private-sector borrowers who use these instruments will also have to undertake some adjustment. This has to be debated and resolved. We can no longer postpone it.”
Kawall agrees that tax exemptions for certain investments, such as tax-incentivized debentures and real estate and agribusiness credit bills (LCIs and LCAs), are a distortion that worsens the problem, as the financial market itself has pointed out, but “not by a long shot” are they the fundamental reason Brazil is seeing stress at such high levels. “If there were a correction to this taxation, would the problem be solved? No.” The former Treasury secretary also points out that the government itself encouraged demand for these investments, which are more sought after by higher-income investors, by taxing, for example, contributions to VGBL private pension plans.
Bittencourt points to other problems. “There are countries that have higher debt than Brazil, others that have higher costs, but none that have both at the same time,” he says.
Other countries, he says, have more room to maneuver to cut spending. In the U.S., for example, 20% of spending is discretionary, while in Brazil that share is less than 5%. “Fiscal adjustment in Brazil is much more complex than in another country.”
Source: Valor International
https://valorinternational.globo.com/
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08/11/2026
U.S. AGREES TO WTO TALKS AS CHINA SEEKS TO JOIN BRAZIL’S CASE
Beijing files document with the body, saying it “has a substantial commercial interest” in Brazilian tariff consultations
The U.S. responded on Monday (10) to Brazil’s request for consultations at the World Trade Organization (WTO) to discuss the two tariffs imposed on Brazilian products imported by the country. In a document sent to the body, the U.S. stated that it “accepts Brazil’s request to initiate consultations” and that its representatives are “available to talk with representatives of your mission on a date convenient to both parties for holding the consultations.”
Also on Monday, China requested to take part in the tariff discussion between the U.S. and Brazil, stating that it “has a substantial commercial interest in these consultations.”
In the document, the country says the measures could also affect Chinese exports, since the discussions could affect the competitive conditions for its products in the U.S. market.
“China therefore respectfully requests that it be allowed to participate in the consultations in this dispute,” reads an excerpt from another document linked to the discussion.
The U.S. statement submitted on Monday responds to the complaint filed by Brazil with the WTO, formalized at the end of last month by the Ministry of Foreign Affairs through Brazil’s Permanent Mission to the WTO, in Geneva.
On July 27, Brazil stated that the measures adopted by the U.S. violated commitments made by the country under the multilateral trading system and represent an attempt to impose sanctions unilaterally.
The initiative challenges the two surtaxes announced last month by the Office of the U.S. Trade Representative (USTR), both based on Section 301 of U.S. trade law: the first, an additional 25% tariff related to the investigation into Brazilian trade practices.
The second is the 12.5% tariff linked to the inquiry into Brazil’s alleged failures to curb the exports of products made with forced labor. Combined, the measures raise taxation on a portion of Brazilian products exported to the U.S. market.
In the statement sent to the WTO, Brazil argues that Washington disregarded the most-favored-nation principle, one of the pillars of international trade, by applying specific tariffs against Brazilian products without extending the same treatment to other members of the organization.
It also contends that the U.S. began charging tariffs above the limits bound with the WTO. Another point of the complaint is the allegation that the U.S. resorted to unilateral measures to respond to alleged trade violations, instead of using the dispute settlement mechanism provided for by the organization itself.
“The U.S. is acting inconsistently with Article 23.1 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) by seeking to redress alleged violations of obligations, or other nullification or impairment of benefits under the covered agreements, or impediments to the attainment of the objectives of those agreements, through unilateral determinations and the imposition of tariffs, rather than having recourse to and abiding by the rules and procedures set out in the DSU,” reads an excerpt from the statement.
The document also recounts the history of the trade dispute between the two countries. Brazil notes that, since February 2025, the U.S. has been adopting successive additional tariffs against trading partners under various justifications.
Source: Valor International
https://valorinternational.globo.com/
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08/14/2026
FOREIGN INVESTORS ACCELERATE EXIT FROM STOCKS, FX AHEAD OF ELECTION
Ibovespa and real move away from the year’s best level as election approaches and President Lula is poised to win
The fast-approaching election period has heightened caution toward Brazilian markets among foreign investors, who have been making sizable withdrawals from the country. Data from B3 show that in Tuesday’s session (August 11), nonresident investors withdrew R$4.7 billion from the stock market, the largest single-day outflow since April 22, 2021.
In August alone, foreign investors have already accumulated net withdrawals of R$11.9 billion from the stock market. This year, the balance of foreign funds in the local stock market peaked in April, when it showed an inflow of R$56.5 billion. Since then, outflows have totaled more than R$32 billion, reducing the accumulated positive balance in 2026 to R$24.4 billion.
At least so far, the deterioration in sentiment has shown no signs of exhaustion. Thursday (13), once again, the Ibovespa and the real ended the session lower, underperforming other comparable markets. At the close, Brazil’s benchmark stock index fell 0.23% to 167,101 points, while the dollar rose 0.25% to R$5.1925.
In the face of the recent aversion to domestic assets, the Ibovespa is now up 3.71% this year, well below the 23.3% gain recorded through mid-April. The spot dollar is now down 5.40% against the real but had fallen by nearly 11% in May.
“This is a permanent exit [by foreign investors], or at least until the election is over, is the following day. Stocks and the dollar seem to have shifted to a different level and won’t return in the short term. It seems there is no longer the seller from yesterday [Tuesday], but there is also no buyer at better prices. That is the feeling looking at prices today [Thursday],” said Ivo Chermont, chief economist at Quantitas.
One of the firms to recently change its asset allocation was Sycamore Capital, which has $180 million under management and reduced its exposure to Brazilian stocks from 5% to close to zero in client portfolios, according to Jean Van de Walle, the wealth manager’s investment director.
One factor behind the decision was the high probability of President Luiz Inácio Lula da Silva (Workers’ Party, PT) winning, Walle said. “My investment thesis was based on Lula’s defeat and Brazil joining a movement toward reforms more favorable to private-sector investment.”
Persistent inflation and the political clash between the local administration and Donald Trump were additional reasons for the change. Following the adjustments, the executive said he now holds only small positions in Vale and Petrobras.
In the foreign-exchange market, the foreign investor’s moves on Monday and Tuesday may have encouraged local funds’ activity on Wednesday, when they bought $1.3 billion, according to B3 data on the derivatives market cited by currency traders and fund managers.
Although the data contain some “noise,” because they classify local funds operated from abroad as nonresident transactions, the indicator provides guidance to market participants. In April this year, the bet in favor of the real had approached a record level, surpassing the $12 billion threshold. Since then, that position has declined sharply and, according to market participants, the net position is now short the dollar against the real by only $600 million.
If pessimism persists, the net short-dollar position could become a long position in the U.S. currency, something that has not occurred since June 2, 2025, traders said.
Jorge Dib, a portfolio manager at Galapagos Capital, notes that it is difficult to determine the true price-setter in the foreign-exchange market but says that when looking at the firm’s model for the real’s movement against other currencies, it is possible to see that politics is on the radar. “It seems to me that there is an increase in volatility because of the election, and if you look at the history of other election years, we will see that this is common.”
The executive explains that in the “carry-to-vol” strategy, volatility carries significant weight, so investors who had been pursuing this type of trade in Brazil because of high interest rates may reduce their exposure as fluctuations increase. “Given the calendar, with a ‘deadline’ for the formal registration of candidates, an increase in volatility is to be expected because the election period is effectively beginning,” he said.
In Dib’s view, even if volatility increases over the coming months, if the external environment remains favorable to carry trades and interest rates remain high in Brazil, the domestic currency is likely to regain ground in the post-election period.
“This is even with the more adverse seasonal flow, because if the real becomes more depreciated than its peers and external tailwinds are favorable, an opportunity opens up because interest rates will still be high and volatility will fall again. In other words, the carry trade becomes attractive again.”
Although he attributes the greater volatility to the election scenario, the Galapagos manager says foreign withdrawals from Brazil are not driven by this factor, but rather by the global context.
This line of reasoning is shared by Gustavo Medeiros, global head of macroeconomic research at Ashmore. In his view, foreign capital withdrawals from the local stock market appear to be more technical than directly related to the election or a rotation into other emerging markets. The Ashmore executive explains that foreign flows into emerging markets have been negative in 2026, mainly because of heavy outflows from Taiwan and South Korea following strong gains in those countries’ stock markets, a move he considers “very likely a portfolio rebalancing.”
Although he does not see the approaching election as a driver of stock-market outflows, Medeiros said he is cautious about Brazil’s contest in a scenario in which, according to him, “fiscal risk is still not priced in.”
During the session, interest-rate futures initially appeared set to decline across the yield curve, but short- and medium-term rates ended more stable, while long-term rates rose, affected by other domestic markets. The DI rate maturing in January 2027 ended unchanged at 13.75%, while the DI rate for January 2031 rose from 14.455% to 14.53%.
Source: Valor International
https://valorinternational.globo.com/
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08/17/2026
CORPORATE BONDS TRY COMEBACK, BUT ONLY LOW-RISK ISSUERS SUCCEED
Banks began testing market in July and managed to distribute 62% of securities after four months of selling less than half
After nearly four months on hold, Brazil’s corporate bond market began showing its first signs of improvement following a restrictive second quarter, although the recovery remains highly limited and concentrated among lower-risk issuers. This pattern is expected to remain through year-end, with the strongest issuers potentially able to extend the maturities of their bonds.
Issuances totaled R$40.1 billion in July, when banks returned to test the market. Another R$59 billion in offerings were underway, according to a survey by ABC Brasil’s research department. Debentures alone accounted for R$28 billion, 40% above the R$20 billion recorded in June.
Another sign of a recovery came from the distribution of offerings. In July, investors absorbed 62% of the securities, the first time the figure had exceeded 60% since February. In previous months, banks had kept a larger share of the issuances in their portfolios as demand retreated. In June, the amount placed in the market was just 46%. In May, it was 42%; in April, 40%; and in March, 47%.
The recovery remains selective and concentrated among large companies and issuers with better credit quality. This means investors have shifted toward these assets in what is known as a “flight to quality.” “Institutional and excellent-quality [securities] are selling well. ‘Mid’ and ‘high yield’ [companies with medium and high returns, but greater risks] are struggling,” said a source who requested anonymity.
The slowdown in the corporate debt market began in March, following a strong start to the year. A series of corporate events interrupted private-credit funds’ fundraising flows and prompted investors to move into more conservative assets, such as bank securities. With demand reduced, several transactions launched between March and April were not fully absorbed by the market.
“Banks ended up acting as a shock absorber during this period of nervousness,” said Samy Podlubny, head of fixed income at UBS BB. According to him, for more than three months, institutions focused their efforts on distributing securities and reducing positions that remained in their portfolios, which limited the launch of new offerings.
With much of this inventory already distributed in the secondary market and fund redemptions more stabilized, issuances began to gain traction again. One of the transactions that marked the reopening of the window was that of Axia, formerly Eletrobras.
The company raised R$1 billion in early July, of which 99% went to funds and individuals, according to data from the Securities and Exchange Commission of Brazil’s (CVM) offering-registration system. It later raised another R$2 billion in a separate offering, concentrated among funds. Taesa, ISA Energia Brasil, and Copel also issued debentures during the month.
Guilherme Maranhão, Itaú BBA’s head of fixed income, said fund redemptions were absorbed without major disruptions in the secondary market. At the same time, banks managed to reduce the positions accumulated during the period of weaker demand. “There was a period of digesting the transactions that remained on the institutions’ books,” he said.
According to Maranhão, the recovery also began to emerge in tax-incentivized debentures, a segment that was hit harder by fund outflows and returned to investors’ radar after the repricing of assets. Recent transactions recorded what was considered strong demand, but the executive stressed that it is still too early to say the window has fully reopened. “The sample is still small.”
Companies continue to need to calibrate the price, size, and structure of offerings to attract investors, particularly for lower-quality credits. In this environment, some fundraisings may come with shorter maturities. “Of course, it varies from case to case, but during periods of volatility, it is common for investors seeking to shorten duration to prefer shorter-dated securities,” said Felipe Thut, head of fixed income at Bradesco BBI.
The high level of interest rates could also lead companies, particularly those raising funds for infrastructure projects, to initially issue shorter-term debt and subsequently replace it with longer-term transactions if conditions improve.
In the first half, the change in investor sentiment and the search for issuers with the highest credit ratings reshaped the corporate debt market. A survey by Quantum Finance for Valor shows that the number of issuers fell significantly while the average size of transactions increased.
About 70% of issuances during the period were concentrated in the first three months of the year—those that were already underway before the shock caused by Raízen and GPA, owner of the Pão de Açúcar chain, seeking out-of-court reorganization in March. And the trend, according to Samer Serhan, a partner at JiveMauá, is for the market to remain extremely selective through year-end. “We haven’t seen such a strong search for extremely high-quality assets since 2023 [the year of the Americanas crisis],” he said.
According to him, issuers with lower credit assessments have found it more difficult to access investors.
The Quantum survey shows that the number of securities fell 34.9% from January to June, while the number of issuers declined 16.9%, from 225 to 187. As a result, the average size of transactions increased 25.9% to R$436.5 million during the period.
Tax-exempt bonds on the rise
The most emblematic case was Sabesp, which raised R$14.7 billion in the first half, nearly 10% of the total volume issued. The amount was almost twice the R$7.3 billion raised by Ecovias Rio Minas, the largest issuer during the same period in 2025. In February alone, Sabesp raised R$8.58 billion in two transactions linked to the IPCA inflation index, maturing in 2038 and 2041.
The concentration among large companies was accompanied by growth in tax-incentivized debentures, which are used to finance infrastructure projects. IPCA-linked securities accounted for 44.4% of the volume issued in the first half, up from 32.7% a year earlier. In monetary terms, they grew 11%, from R$59.8 billion to R$66.5 billion, bucking the market’s contraction.
“Infrastructure transactions tend to be larger and more structured, consistent with the financing of projects that are large in scale and have long maturation periods,” Serhan said.
Debentures linked to the DI rate remained in the lead, but lost ground during the period. Their share fell from 59.3% to 51.4%, with volume declining 29%, from R$108.3 billion to R$76.9 billion. IPCA-linked issuances averaged R$679 million, nearly twice the R$343 million average for conventional transactions tied to the DI rate.
The shift is also reflected in the sectoral breakdown. Electricity, sanitation, and transportation and logistics together accounted for 62% of the volume raised in the first half. Electricity remained virtually unchanged from the previous year, at R$52.9 billion. Sanitation nearly doubled, from R$12 billion to R$23.7 billion, while transportation and logistics generated R$16.9 billion.
In the opposite direction, issuances by the financial sector fell approximately 73%, from R$39.9 billion to R$10.6 billion. The market, which in 2025 had strong combined participation from the energy and financial sectors, became more concentrated in infrastructure and regulated services.
Serhan highlights that the large number of concessions awarded in recent years, particularly in transportation and urban mobility, has created new financing needs. At the same time, the Brazilian Development Bank (BNDES) began providing a larger share of the funds allocated to projects, while some investment schedules were extended, reducing the immediate need for fundraising.
The greater selectivity is also explained by the mismatch between the rates companies are willing to accept and the returns demanded by investors. Bruno Spilberg, senior credit portfolio manager at SPX, said fund redemptions reduced their capacity to absorb new offerings. At the same time, companies began postponing transactions as buyers demanded higher premiums.
“There is demand from companies to issue, but there is no investor appetite at the rates they want,” he said. “Those who can are holding back issuances. Only the obvious names are raising funds.”
Guilherme Almeida, head of fixed income at Suno Research, noted that through February, the market had been working with a more favorable outlook for interest-rate cuts. The reversal of that expectation, the steepening of the yield curve and increased volatility prompted companies and investors to adopt greater caution.
The dispersion in rates shows the degree of selectivity. According to Almeida, top-tier infrastructure issuers were able to raise funds at rates close to IPCA plus 6.2% a year, while higher-risk transactions reached double-digit rates. Among securities linked to the DI rate, additional spreads ranged from 0.20 to 13.84 percentage points.
In July, fund flows also showed some normalization. Private-sector credit funds attracted R$14.4 billion after a string of withdrawals in the first half. Infrastructure funds, meanwhile, recorded net redemptions of R$1.6 billion, below the R$8.7 billion withdrawn in June.
Improved fund flows and the reduction in banks’ inventories are helping to reactivate issuances, but they do not yet signal a broad-based recovery. A survey by ABC Brasil of 88 investors shows that 56% expect debenture issuances linked to the CDI rate to grow by at least 10%. For incentivized debentures, 47% project an increase of that magnitude.
According to Odilon Costa, who heads the bank’s research division, the more constructive outlook is related to lower expectations for spread widening. Among incentivized debentures, 66% of respondents expect premiums to remain stable or narrow, compared with 21% in the second-quarter survey.
Despite the decline in issuances, the secondary market remains liquid. After growing 33.9% in 2025, to R$947.4 billion, trading volume increased 20.6% in the first half of this year, to R$494.6 billion, according to Quantum. In July, trading totaled R$99.5 billion, virtually unchanged from June, according to ABC Brasil. “The market is still healthy; the secondary market is turning over well,” Serhan said.
Banks expect issuances to gradually normalize during the second half as investors rebuild their portfolios and institutions resume originating transactions. Among asset managers, however, a more cautious view prevails: as long as interest rates remain high and funds have not fully recovered their fundraising capacity, the reopening is likely to remain concentrated among the highest-quality issuers.
Source: Valor International
https://valorinternational.globo.com/
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08/18/2026
PETROBRAS CONFIRMS OIL DISCOVERY AT MOUTH OF AMAZON RIVER IN AMAPÁ
CEO Magda Chambriard says discovery confirms the region’s potential, but further studies are needed to determine commercial viability
Petrobras CEO Magda Chambriard confirmed Monday (17) the discovery of oil in the Amazonas River Mouth basin, off the coast of Amapá state. “There is oil; we don’t know how much. We are extremely optimistic,” the CEO said while visiting, alongside President Lula, a drilling rig carrying out the first work on the FZA-M-59 block off the state’s coast.
Chambriard said the discovery confirms studies pointing to significant oil potential in the region. Drilling of the Morpho well in the FZA-M-59 block began in 2025. The work is expected to take 15 to 20 days. During her presentation, Chambriard displayed an oil sample collected at the site, confirming the presence of the resource.
On Friday (14), Petrobras had reported “indications of hydrocarbons” without specifying whether the discovery involved oil or natural gas.
The discovery in the Amazonas River Mouth basin demonstrates that Petrobras will remain a major oil producer in Brazil, Chambriard said. The find does not yet have commercial value, she added. “Announcing a discovery is different from announcing a commercial discovery. We still have a series of studies to determine the potential for oil production,” she noted.
According to the executive, Petrobras needs to replenish its reserves after Brazil’s pre-salt oil production reaches its expected peak between 2034 and 2035.
Chambriard also said that once drilling of the first well is completed, the company will have a better understanding of how much oil is present in the area. Petrobras has three more wells to drill in the FZA-M-59 block and another six in different areas of the region. For the remaining wells, the state-owned oil company is awaiting additional licenses from Brazil’s environmental protection agency IBAMA.
Petrobras has so far invested $300 million (about R$1.5 billion) in drilling the Morpho well in the Amazonas River Mouth basin, said Clarice Coppetti, the company’s corporate affairs director. In a news conference after visiting the drillship in Amapá, she said that R$150 million of the investment has gone toward environmental protection and wildlife-response infrastructure. Drilling costs $1 million a day.
Regarding licenses for three additional wells in the FZA-M-59 block, Coppetti said IBAMA issued an opinion on August 10 requesting additional measures, including an increase in the number of vessels and the expansion of capacity at a wildlife-response center in Oiapoque, Amapá, to care for manatees in northern Brazil. She said Petrobras and IBAMA are engaged in “constant dialogue,” with the process being monitored by the Chief of Staff Office.
Chambriard said every stage of the studies on Brazil’s Equatorial Margin has reinforced Petrobras’s optimism about the region’s potential. She noted that the oil giant’s bid for the block, in a 2013 auction, was part of an effort to diversify exploration investment toward Brazil’s North and Northeast. “When that happens, production follows,” she said.
The announcement came after a week of reconciliation between Lula and Senate President Davi Alcolumbre, who attended the event on Monday (17). It also coincided with the start of the election campaign. The announcement came just days after the government issued decrees regulating markets linked to the energy transition, including green hydrogen, carbon capture and storage, and sustainable aviation fuel.
The Equatorial Margin, particularly the Amazonas River Mouth basin, is considered one of Brazil’s last oil frontiers. It is also an environmentally and socially sensitive region, prompting years of debate over the feasibility of oil exploration there.
The Amazonas River Mouth discovery was not the first Petrobras has announced on the Equatorial Margin. In 2024, the state-owned company found indications of hydrocarbons at the Pitu Oeste well in the Potiguar basin, off Rio Grande do Norte state. That same year, Petrobras reported “petroleum accumulation” in ultradeep waters at the Anhangá well in the same basin. At the time, the oil giant was appealing IBAMA’s denial of a permit for the Amazonas River Mouth block. The permit was ultimately granted in October 2025.
Source: Valor International
https://valorinternational.globo.com/
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08/19/2026
DEBT DEALS FALL SHORT AS MORE COMPANIES SEEK COURT PROTECTION
Casas Bahia, InterCement, Unigel and St. Marche are among businesses seeking broader restructuring after earlier agreements with creditors
Out-of-court restructuring has gained traction in Brazil as a faster, less costly way for companies to renegotiate debt. But a growing number of businesses are finding that the relief provided by such deals is not enough to keep them afloat.
Casas Bahia, InterCement, Unigel and St. Marche are among the companies that later turned to court-supervised restructuring in search of a broader overhaul. The companies declined to comment.
Restructuring specialists expect more cases to follow as high interest rates remain in place for an extended period.
The latest example is Casas Bahia, which filed for court-supervised restructuring on Sunday (16), with R$17.3 billion in debt, just over two years after renegotiating R$4.1 billion through an out-of-court process. That agreement extended maturities and lowered financing costs and, at a later stage, led to the conversion of about R$1.5 billion in claims held by lenders Bradesco and Banco do Brasil into shares.
Even so, continued losses and difficulty generating cash kept pressure on the electronics and furniture retailer, eventually pushing it toward the more comprehensive restructuring confirmed this week.
A growing shift
A survey prepared for Valor by the Brazilian Out-of-Court Restructuring Observatory (Obre) identified 35 cases since 2005 in which companies moved from an out-of-court restructuring to a court-supervised process, with such cases becoming more frequent in recent years. In six instances, the original proceeding itself was converted.
Juliana Biolchi, a director at Obre, said Brazil’s corporate restructuring law imposes waiting periods on successive restructuring filings but does not prevent a company from seeking court protection after an out-of-court proceeding. Because out-of-court agreements typically cover only part of a company’s liabilities, Biolchi believes more businesses could take that route if their cash position shows the first measure was not enough.
A restructuring specialist who asked not to be identified said companies have increasingly limited out-of-court proceedings to financial creditors, leaving suppliers and employees outside the deal. That reduces their ability to carry out deeper operational changes when such measures are needed to put the business back on a sustainable footing.
In cases such as Casas Bahia, where the company needs to rethink the business, close stores and cut jobs, the cost of those measures may ultimately require court-supervised restructuring. “Often, the company’s problem is not just its financial debt,” the source said.
The debate has become more relevant as out-of-court restructuring grows more popular in a corporate environment marked by persistently high interest rates, tight credit and greater difficulty refinancing debt. Financing costs erode cash generation and leave highly leveraged companies with less room to restore their investment capacity.
The figures illustrate the growing use of the tool. From January through July this year, 43 out-of-court restructuring petitions were filed, involving 163 companies and 11,737 creditors, Obre data show. The cases filed in just seven months amount to slightly more than 13% of the 328 proceedings the organization has identified since 2005, when the current Bankruptcy and Corporate Reorganization Law took effect.
In July alone, seven new petitions were filed, involving 63 companies, 1,016 creditors and R$9.6 billion in debt.
Narrower scope
In an out-of-court restructuring, a company negotiates directly with specific groups of creditors and then submits the agreement for court approval. Because the plan can be limited to certain portions of its liabilities, the process tends to cause less disruption to suppliers and customers and less damage to the company’s reputation. It is generally chosen when key creditors are still willing to support a negotiated solution.
A reform of Brazil’s Bankruptcy and Corporate Reorganization Law, approved in late 2020 and in force since January 2021, made the mechanism easier to use. Companies can now file a petition with the initial support of creditors representing at least one-third of the claims covered by the plan and are given 90 days to reach the threshold required for approval.
One expert who asked not to be identified said out-of-court restructuring offers many advantages and that attempting to resolve a crisis through the mechanism is considered worthwhile even if it ultimately proves insufficient.
Luís Caldas, a partner at restructuring consultancy Íntegra, said the initially private negotiations reduce a company’s exposure. By the time its difficulties become public, the business already has a plan approved by a majority of creditors or backed by a significant share of them.
That advantage, Caldas said, comes with a narrower reach. Out-of-court restructuring generally focuses on selected classes of creditors, does not cover tax liabilities and can include labor claims only through collective negotiations with the relevant union.
Broader protection
The move to court-supervised restructuring usually comes when the relief secured under the first agreement is no longer enough to support the financial overhaul, particularly if operating conditions continue to deteriorate, Caldas said. If a company concludes that it will be unable to honor the agreement and begins facing new enforcement actions or cash freezes, a court-supervised process provides broader protection.
The so-called “stay period” generally suspends for 180 days lawsuits and enforcement proceedings involving claims subject to the restructuring. The process also covers a wider range of liabilities, including labor claims, and allows companies to seek specific installment arrangements or settlements for tax debt.
The trade-off is a more expensive and time-consuming proceeding, with a greater impact on the company’s reputation and its commercial and financial relationships. There is also a period of uncertainty between the filing and approval of the restructuring plan.
Unlike an out-of-court proceeding, a company cannot simply choose a limited number of liability classes to restructure.
Source: Valor International
https://valorinternational.globo.com/
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08/19/2026
FOREIGN INVESTORS PULL RECORD R$12.6BN FROM BRAZILIAN STOCKS
Weekly outflow is the largest since the series began in 2008 as election uncertainty and high real rates weigh on local equities
Foreign investors pulled R$12.6 billion from stocks already listed on B3 between August 10 and 14, the largest weekly outflow since the data series began in 2008, based on Bloomberg figures. A more cautious stance ahead of Brazil’s elections and intensifying competition for global capital are among the factors behind the move, emerging-market fund managers told Valor.
After inflows peaked at R$56.4 billion in April, non-resident investors withdrew R$38.2 billion over the following four months. In just 10 trading sessions in August, outflows totaled R$18.1 billion, putting pressure on the benchmark Ibovespa stock index, which is down 6.55% this month.
On Tuesday (18), the Ibovespa fell 0.27% to 166,335 points. Against that backdrop, net foreign inflows into Brazilian equities for the year have fallen to R$18.2 billion, virtually the same amount withdrawn in August alone.
Election risk
With technical positioning in Brazilian equities already very light, Daniela da Costa-Bulthuis, an emerging-markets portfolio manager at Dutch asset manager Robeco, said foreign capital is being pulled out by tougher competition for investment flows as well as a lack of clarity over the outcome of the presidential election.
“Domestically, investors are demanding a higher risk premium as the elections approach and visibility on policies for the post-2026 period remains limited,” Costa-Bulthuis said. “Meanwhile, globally, capital is being reallocated to markets with stronger growth and technology exposure, while higher fixed-income yields in the U.S. have reduced the relative attractiveness of some emerging markets.”
While she continues to hold high-quality Brazilian companies with strong balance sheets, Costa-Bulthuis said she would need greater clarity on a “credible fiscal consolidation for 2027” before becoming more constructive on the Brazilian market as a whole.
Raphael Luescher, co-head of emerging-market equities at Switzerland’s Vontobel Asset Management, also said that while equity valuations are objectively cheap, the near-term risk-reward trade-off has been squeezed by election uncertainty, fiscal deterioration and persistently high real interest rates.
“The market appears to be in a holding pattern amid the political stalemate and the approaching October presidential election, whose outcome will likely be the main catalyst for a repricing of assets in either direction,” Luescher said.
Beyond the presidential race, the composition of Congress will be critical in determining fiscal credibility and the prospects for reform, in Vontobel’s view.
“A president without a functioning coalition in Congress cannot pass constitutional reforms,” Luescher said. “For now, specific and quantified fiscal commitments, especially regarding mandatory spending, remain scarce.”
Despite concerns over election-driven volatility and the sharp foreign outflows, Vontobel remains overweight Brazil in its emerging-market equity funds.
Long-term case
Luescher said the allocation to Brazilian stocks is driven primarily by a long-term view and company fundamentals. The firm focuses on sector leaders with rising returns on invested capital (ROIC) that trade at relatively attractive valuations.
“More broadly, cash-flow returns are mispriced and attractive from a historical perspective, creating an interesting opportunity for long-term investors.”
Beyond the elections, a more modest-than-expected cycle of Selic base rate cuts has also reduced foreign appetite for Brazilian assets, Costa-Bulthuis said. The Central Bank’s cautious tone suggests that “the scope for further reductions is limited and monetary policy will remain quite restrictive,” she added.
Luescher expressed a similar view, pointing to persistently high real interest rates as a key concern for equity investors.
“As long as inflation remains above target, partly driven by the expansion of fiscal stimulus by the Lula government ahead of the October elections, we do not expect the Central Bank, which continues to warn of upside risks, to act decisively on interest rates.”
High real rates remain the main structural obstacle to multiple expansion because they keep the cost of capital elevated, Luescher said. Domestic investors therefore remain underweight equities as redemptions continue and other asset classes offer more attractive returns.
Global competition
Costa-Bulthuis also pointed to portfolio reallocations toward markets with stronger earnings and growth dynamics as a headwind for Brazil.
“There are opportunities across Asia and, in developed markets such as the U.S., Europe and Japan, we are seeing rising yields and positive earnings growth. Brazil therefore faces both a domestic risk-premium adjustment and tougher competition for global capital.”
Corporate earnings in South Korea and Taiwan remain particularly strong, supported by continued investment in artificial intelligence, semiconductors and hardware. Vontobel believes the technology cycle will prove stronger and more durable than the market currently expects.
“For that reason, we see little potential for a rotation in the near term,” Luescher said.
Source: Valor International
https://valorinternational.globo.com/
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08/19/2026
JBS PROPOSES TAKING PILGRIM’S PRIDE PRIVATE
Brazilian company offers 2.086 JBS Class A shares for each Pilgrim’s share
Brazilian meat giant JBS said Tuesday (18) that it had submitted a nonbinding offer to the board of directors of Pilgrim’s Pride (PPC), its U.S. subsidiary, to acquire shares held by minority shareholders. The deal would result in the delisting of the chicken producer whose shares trade on the Nasdaq.
Under the proposal, each Pilgrim’s Pride minority shareholder would exchange one common share for 2.086 JBS Class A shares. The exchange ratio is based on the closing prices on Tuesday (18), when JBS shares closed at $13.66 and Pilgrim’s shares at $28.49. JBS owns nearly 82% of Pilgrim’s shares.
Jeremiah O’Callaghan, chairman of JBS’s board of directors, said in a statement that “for more than 16 years, JBS and PPC have worked together as PPC expanded its operations, strengthened its global presence and significantly grew its revenue.”
“We believe this proposal offers PPC shareholders the opportunity to continue participating in PPC’s future performance through ownership of JBS shares, with exposure to a larger and more globally diversified business,” he said. O’Callaghan added that JBS’s long-standing relationship with and familiarity with Pilgrim’s Pride’s employees and operations “should support continuity for employees, customers and business partners throughout the process.”
The company also said the move would simplify its organizational structure and reduce costs associated with PPC’s public listing.
The proposal must be reviewed by a special independent committee of the U.S. company, which is expected to be advised by financial and legal advisers.
Once approved by Pilgrim’s decision-making bodies, the proposal must also receive the approval of a majority of the U.S. company’s shareholders other than JBS. In addition, the transaction will be subject to certain closing conditions. According to the statement, advancing the proposal does not require approval from JBS shareholders.
Once the process is completed, Pilgrim’s shares could cease trading on the Nasdaq.
Citi is serving as JBS’s financial adviser, while law firm White & Case LLP is acting as its legal adviser. Collected Strategies is serving as communications adviser, according to the Brazilian company’s filing.
Source: Valor International
https://valorinternational.globo.com/
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08/20/2026
VALE WEIGHS NO-CASH ROLE IN PORTO SUDESTE BID
Brazilian mining group could back BlackRock-owned GIP and Gerdau in bid for Rio de Janeiro iron ore terminal without taking an equity stake
Vale is exploring a structure that would allow it to support a bid for Porto Sudeste, in Rio de Janeiro state, without making a direct cash investment in the acquisition, Valor has learned.
One option under consideration is a long-term take-or-pay agreement under which the Brazilian mining giant would guarantee minimum iron ore volumes for the terminal even if it did not fully use the capacity it contracted.
Such a commitment would give Porto Sudeste greater revenue visibility, helping the prospective buyer value and finance the acquisition. The arrangement could also reduce potential antitrust concerns because Vale already operates port infrastructure in Itaguaí, Rio de Janeiro.
Under the structure being discussed, Vale would back the bid led by Global Infrastructure Partners (GIP), the infrastructure manager controlled by BlackRock, and Brazilian steelmaker Gerdau, without necessarily taking an equity stake in the terminal. No final structure has been agreed, and the volumes and duration of a potential contract remain under negotiation, people familiar with the talks said.
Vale initially participated directly in the consortium with GIP and Gerdau, which submitted one of two binding bids for Porto Sudeste.
The other offer came from U.S. infrastructure investor I Squared Capital, which has sought to acquire port assets in Brazil in recent years without success. Its previous targets included Wilson Sons and CLI, or Corredor Logística e Infraestrutura. I Squared already owns energy and data-center assets in Brazil.
Antitrust concerns
Vale’s potential equity participation in Porto Sudeste has raised concerns among rivals and questions over the competition implications of the transaction, people close to the discussions said.
The Brazilian miner already controls significant port infrastructure for iron ore exports in Rio de Janeiro through the Ilha Guaíba Terminal and the Companhia Portuária Baía de Sepetiba terminal.
Against that backdrop, participants in the sale process have been assessing whether Vale’s acquisition of another terminal could draw scrutiny from Brazil’s antitrust watchdog, Cade.
Porto Sudeste serves iron ore producers in Minas Gerais, including companies without their own export infrastructure, and provides an alternative to terminals vertically integrated with large mining groups.
Replacing an equity investment with a take-or-pay contract could reduce the competition risks associated with Vale taking a direct stake in Porto Sudeste. Even that arrangement, however, could still face Cade review depending on the length of the agreement, the volumes reserved for Vale and its impact on access for other miners.
One person familiar with the matter said that if the volume guaranteed to Vale were large enough, the competitive impact could effectively be the same as if the company held an equity stake.
Itaguaí precedent
The debate echoes the controversy surrounding ITG-02, a new iron ore terminal at the Port of Itaguaí in the same region of Rio de Janeiro.
The site is known as the “Área do Meio,” or “Middle Area,” because it lies between terminals operated by Vale and CSN. Smaller miners that relied on vertically integrated infrastructure to ship their output had argued that the area should be made available to them.
Brazil’s waterways regulator, Antaq, had proposed restricting the participation of certain companies in the auction. In 2024, however, the Federal Court of Accounts (TCU) ruled that such a restriction would require a prior opinion from Cade.
The limitation was removed, and the antitrust authority ultimately did not issue a ruling on the matter. Vale and CSN did not take part in the auction, which was won by Cedro Participações, the only bidder.
Port capacity
Located in Itaguaí, Porto Sudeste can handle about 50 million tonnes a year and is licensed for a future expansion to 100 million tonnes.
The terminal handled a record 27.8 million tonnes in 2025, up from 21.9 million tonnes a year earlier. Part of its unused capacity could be filled by a future agreement with Vale.
Mubadala Capital and commodities trader Trafigura have been discussing a sale of the asset since at least 2024. The process also includes Mineração Morro do Ipê, owner of the Ipê and Tico-Tico mines in Minas Gerais. The sellers aim to complete the transaction this year.
Industry sources describe Porto Sudeste as an attractive asset, citing strong long-term demand potential and dollar-denominated revenue.
Still, they point to its current dependence on iron ore shipments, Morro do Ipê’s importance in filling the terminal and volumes that have fallen short of earlier expectations as drawbacks.
Earnings pressure
More recently, the company reported weaker-than-expected results that still require further explanation, market sources said.
Porto Sudeste do Brasil posted net revenue of R$2.7 billion in the first half of this year, down 22% from a year earlier. Its loss widened to R$1.4 billion from R$285 million in the same period last year.
Stonepeak, which had been evaluating the acquisition alongside Australia’s M Resources, has dropped out of the process and did not submit a binding bid. Its withdrawal has already been formally communicated to the sellers.
A person close to the transaction said the infrastructure manager had not been viewed as one of the leading contenders for the asset.
Asked for comment, Vale reiterated a statement released on April 30 saying it evaluates investment opportunities in the ordinary course of business in line with its strategic priorities.
The company added that capital-allocation decisions go through a rigorous assessment process and follow its policies and governance rules. Vale also said it would keep the market informed of any material developments arising from such opportunities or related to its business.
Mubadala, Trafigura and I Squared declined to comment.
Source: Valor International
https://valorinternational.globo.com/
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08/25/2026
BRAZIL-CHINA TRADE TRIANGULATION UNLIKELY, DESPITE U.S. CRITICISM
White House lists Brazil among countries accused of facilitating illegal transshipment of Chinese goods but experts say country makes little sense as a hub for transshipping
The inclusion of Brazil on a list of countries that the United States accuses of helping China evade tariffs imposed by the White House on the Asian giant is another move with shaky grounds in an aggressive U.S. foreign policy toward Latin American governments in general and Brasília in particular.
This month, the White House published a report on what it considers the growing challenge of “illegal transshipment,” particularly of Chinese goods, through third countries. The document lists and classifies 40 countries accused of engaging in the practice.
Brazil was placed in Tier 2, or “Scale Leaders,” defined as countries with significant economic integration with China. The group also includes Indonesia, Malaysia, Thailand, Turkey, and Vietnam.
According to the White House, these countries combine significant illegal transshipment volumes with deeper integration into China-linked supply chains, input sourcing, manufacturing platforms, logistics systems, or regional rerouting channels.
“These countries possess sufficient industrial scale, port capacity, supplier infrastructure, manufacturing depth, or logistics capacity to move significant volumes of China-linked goods into U.S.-bound trade flows,” the report says.
Brazil and Turkey, specifically, are described by the White House as larger regional production and logistics platforms capable of supporting rerouting or transformation operations in selected product categories. The report provides no examples.
Brazil is also cited, along with Argentina, Chile, Colombia, and Peru, as part of a “Latin American corridor” for illegal transshipment.
Experts say the triangulation of Chinese goods is not a new issue. With the U.S. tariff offensive against China, they say, it is possible that Chinese companies are seeking other countries to access the U.S. market at lower cost. But the argument makes more sense for neighboring Vietnam, for example, than for Brazil.
Brazil, they point out, is the second-most heavily tariffed country by the U.S., behind China itself and tied with Turkey, making it far from an ideal location for transshipment.
A Valor analysis comparing products that Brazil imports from China with those it sells to the U.S. shows that the “common trade” among the three countries accounts for a relatively small share of Brazil’s exports to the U.S., representing less than 6% of the total.
The White House report cites a series of studies estimating the cost of transshipment to the U.S. Treasury. One study, by the White House Council of Economic Advisers (CEA), estimates potential illegal transshipment in 2025 at between $34.2 billion and $89.6 billion.
The CEA calculation uses a methodology developed by Caroline Freund, director of the University of California San Diego’s School of Global Policy and Strategy and an international trade specialist, in a study titled “The China Wash: Tracking Products to Identify Tariff Evasion Through Transshipment.”
Freund’s research, however, does not cite Brazil. She told Valor that the country makes little sense as a hub for transshipping Chinese goods to the U.S. for three reasons. One is that U.S. tariffs on goods manufactured in Brazil are high, while Brazil’s own import tariffs also tend to be high.
“It would be difficult to gain a tariff advantage through transshipment via Brazil. In other words, the purpose of transshipment is precisely to avoid tariffs, but Brazil’s high import tariffs, combined with high U.S. tariffs on Brazilian products, make that impossible,” she said.
The second reason is that Brazil is not a convenient option from a transportation and logistics standpoint. “A route that went through China and Brazil would be costly, as Brazil is not on the way,” Freund said.
Finally, she notes that Brazil is not a major exporter of manufactured goods.
“In line with that, U.S. imports from Brazil declined between 2024 and 2025,” Freund said. On the Brazilian side, exports to the U.S. fell nearly 7% year over year, according to data from Brazil’s Ministry of Development, Industry, Trade, and Services (MDIC).
However, analysts unanimously agree that President Donald Trump’s tariff policy—motivated, at least in part, by U.S. irritation over China’s presence and trade partnerships in Latin America—is in fact pushing Brazil toward Asia.
“Brazilian banks and officials will do what is needed to preserve the country’s access to the U.S. financial system. But the current trajectory raises the odds that, over time, more Brazilian firms will prefer a counterparty with nothing at stake in that system—a Chinese supplier, bank, or financier,” James Story and Ricardo Zúniga wrote for the Atlantic Council think tank.
They are referring not only to the U.S. tariff campaign against Brazil but also to the U.S. approach to security in Latin America.
Also this month, U.S. Defense Secretary Pete Hegseth said the U.S. military is preparing to conduct operations in the territory of allied countries to combat drug-trafficking organizations in Latin America. According to him, groups designated as terrorist organizations, together with partner governments, will be legitimate targets of the United States government.
The statement sparked uncertainty in the Brazilian press, as the U.S. government has officially designated the Brazilian criminal groups Primeiro Comando da Capital (PCC) and Comando Vermelho (CV) as terrorist organizations, but the designation has not been recognized by the Brazilian government, nor has any bilateral cooperation agreement been signed to combat the groups. The Defense Department did not respond to requests for clarification about Hegseth’s remarks and their implications for Brazil.
“Coercion is rarely successful with Brazil. Each measure meant to remedy a problem the [U.S.] administration has identified in Brazil instead reinforces the perception that the safer long-term bet is to lean less on the United States,” Story and Zúniga wrote.
Story was a U.S. Foreign Service officer in Brazil, while Zúniga served as U.S. consul general in São Paulo and as principal deputy assistant secretary in the State Department’s Bureau of Western Hemisphere Affairs. That branch of the U.S. State Department, which covers Latin America, has just received a new leader with the appointment of Republican billionaire businessman Juan Pablo Segura.
Some analysts believe that appointing a permanent head to a senior position that had remained under an acting official since 2025 could help improve communication between public- and private-sector players in Brazil and the U.S. But Segura has also previously made strong public criticisms of Brazil, particularly of Federal Supreme Court Justice Alexandre de Moraes.
“Beijing brings its own hazards and opacity, yet Washington is increasingly seen as the more erratic and unreliable partner,” Story and Zúniga wrote.
Source: Valor International
https://valorinternational.globo.com/
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08/27/2026
FINANCE MINISTRY BACKS EXTENSION OF 12% OIL EXPORT TAX
Foreign Trade Chamber is set to vote on keeping levy for another 60 days, raising concern among oil producers
Brazil’s Finance Ministry has backed extending the 12% tax on oil exports for another 60 days, Valor has learned. The proposal will be considered this Thursday (27) by the Foreign Trade Chamber (Camex), just ahead of the levy’s scheduled expiration on Sept. 9. The ministry’s position has put oil companies on alert.
The Finance Ministry sent its recommendation Tuesday to the Ministry of Development, Industry, Trade and Services (MDIC), which chairs Camex. The document, seen by Valor, is signed by Finance Ministry Executive Secretary Rogério Ceron.
The ministry said its technical analysis shows that the international environment remains highly volatile, with logistical constraints and uncertainty over when supplies of oil and refined products will normalize.
“In view of the elements presented in the information note, this ministry understands that the available information supports, from a technical standpoint, temporarily maintaining the 12% rate for another 60 days, without an increase, accompanied by continuous monitoring and periodic reassessment of conditions in the international and domestic markets for oil and refined products,” Ceron said in the document.
Supply risks
The Finance Ministry said significant constraints on production and exports from the Persian Gulf remain in place, alongside risks affecting international energy transportation routes, particularly through the Strait of Hormuz. In its view, those circumstances warrant continued monitoring of supply conditions.
The ministry also said domestic data collected while the export tax has been in effect show developments “consistent” with the measure’s regulatory purpose, including increased crude processing at Brazilian refineries, lower imports of oil and refined products, and higher domestic production of fuels, particularly diesel.
At the same time, both oil production and exports have continued to expand.
“The available information does not indicate that the 12% rate has materially undermined the economic attractiveness of exploration and production operations, the continuation of projects or the expansion of supply in the short term,” Ceron said.
Against that backdrop, he said, the technical assessment “indicates the feasibility of maintaining the current 12% rate for an additional period of 60 days.”
The ministry considers that timeframe consistent with the temporary nature of the measure and with the need to provide regulatory stability and predictability, while allowing market conditions to be reassessed.
The analysis found no technical grounds, however, for raising the tax at this stage. “The measure currently in place is already producing regulatory effects consistent with its purpose,” the document said.
Industry concerns
Parts of the oil industry are concerned that a measure introduced on regulatory grounds to help offset subsidies for gasoline and diesel may be turning into a revenue-raising tool and could remain in place for longer, weighing on companies’ cash flow and investment decisions.
The tax generated R$3.16 billion in revenue in July, the Federal Revenue Service said Tuesday. The Finance Ministry’s formal recommendation just before the Camex meeting has heightened concern in the sector.
Companies argue that the effects of the levy are more likely to emerge in decisions on new investment than immediately in production from fields already operating.
There is also criticism that the tax is levied on companies’ revenue rather than profits. With production and logistics costs also rising, industry participants say the measure could undermine lower-return projects and even affect operations that, under certain circumstances, are not profitable, further eroding project economics.
Another concern is the lack of a clear end date. Companies fear the tax could be repeatedly extended without a final deadline or objective criteria for its removal.
Even setting an expiration date would not resolve broader objections to the model. Industry participants argue that a mechanism of this kind, if used in exceptional circumstances, should be established through legislation and debated by the National Congress.
Legal challenge
In August, major oil companies went to court to challenge the resolution imposing the 12% tax on crude-oil exports.
Last Friday, the Brazilian Petroleum, Gas and Biofuels Institute (IBP), which represents companies across the industry, sent a letter to MDIC urging the government not to extend the export tax.
The group argues that Brazil is a price taker in the global oil market, accounting for about 4% of world production and 2% to 3% of global oil exports, and therefore lacks sufficient market power to influence international prices.
IBP also said the tax has failed to redirect to the domestic market oil that would otherwise have been exported because Brazil’s refining system is structurally unable to absorb all the crude produced in the country.
In the group’s view, the levy, which applies to companies’ gross revenue, also places a disproportionate burden on exploration and production projects and threatens the viability of investments planned to revitalize mature fields.
Refining limits
IBP cited Finance Ministry data showing that domestic crude processing reached 101% of national refining capacity, which it said demonstrates that domestic demand for crude has reached its limit.
The group also pointed to an earlier note from the Secretariat for Economic Reforms concluding that the available data did not allow the increase in domestic processing and fuel supply to be attributed through “exclusive causality to the Export Tax.”
“It must be recognized that there is no rationale for maintaining any purportedly regulatory measure aimed at preventing or discouraging oil exports,” IBP said.
If Camex approves the proposal, it will be the second extension of the 12% rate.
The government had estimated that the measure would raise R$15.6 billion over four months, based on Brent crude at $90 a barrel.
The Finance Ministry and MDIC did not respond to requests for comment.
Source: Valor International
https://valorinternational.globo.com/
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08/30/2026
ANTITRUST REGULATOR ACCEPTS APPEAL AGAINST AMERICAN-AZUL DEAL, OPENS PROBE
Rapporteur orders further investigation into disputed aspects of American Airlines’s investment in Azul
Brazil’s Administrative Council for Economic Defense (Cade) has accepted an administrative appeal filed by Abra, the holding company of Gol and Avianca, challenging American Airlines’s investment in Azul. The appeal was accepted Wednesday (26) night by the Cade board member and case rapporteur Camila Cabral Pires Alves. She also decided to consider technical submissions from IPSConsumo and the Brazilian Institute of Competition and Innovation (IBCI), even though neither organization was formally admitted to the proceedings. Both were denied third-party status in the case, unlike Abra.
The rapporteur also ordered a further investigation focused on issues that remain disputed in the deal between Azul and the U.S. airlines—as part of Azul’s Chapter 11 bankruptcy proceedings in the United States, American and United agreed to invest $100 million each in the Brazilian airline.
United’s investment, which involved an existing Azul shareholder, was approved by the Cade in February. More recently, the Cade’s General Superintendence also cleared American’s investment.
On August 18, Abra filed an administrative appeal with the Cade challenging the unconditional approval of American Airlines’s investment in Azul. The approval had been granted July 31 by the Cade’s General Superintendence. This was the appeal accepted by the Cade on Wednesday. In the rapporteur’s view, all legal requirements had been met, including timeliness, standing, and legal interest in appealing. The merits of the appeal will now be formally considered by the Cade’s tribunal.
“Among other issues, further examination may address Azul’s corporate and governance structure, safeguards applicable to potential information risks, and the possible effects of the transaction on commercial relationships and competitive conditions in the affected markets,” the rapporteur said in her opinion. “Supplementing the investigation does not presume that the concerns raised are well-founded, does not entail a broad reopening of the analysis already conducted, and does not prejudge the merits of the appeal.”
One of the issues brought to the Cade by IPSConsumo is a request to open an Administrative Proceeding for the Investigation of a Concentration Act (APAC) to examine indications that the effects of transactions involving American Airlines, United Airlines, and Azul may have been implemented prematurely. According to IPSConsumo, if the practice known as “gun jumping” is proven, Brazilian law provides for a fine of up to R$60 million.
According to the institute, the U.S. airlines were already participating in strategic discussions and negotiations involving the Brazilian company, with direct effects on third parties and the market, while the competition reviews were still underway as part of the Chapter 11 process.
“There are public elements that justify an investigation into the joint participation of competing companies in strategic discussions and negotiations with third parties while antitrust reviews were still underway. It is up to the Cade to examine the facts and, if premature implementation is proven, impose the sanctions provided by law with appropriate rigor,” said Juliana Pereira, president of IPSConsumo.
American and Azul declined to comment.
Source: Valor International
https://valorinternational.globo.com/
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