Fitch: Brazilian Corporates - Carnival Provides Relief from Misery
'Cash flow from operations is expected to decline by levels not witnessed in the past decade,' said Debora Jalles, Director. 'Declining demand, increasing unemployment, persistently high inflation and interest rates, depressed commodity prices, foreign exchange volatility and tight credit markets have collided to create a perfect storm, with Brazilian corporates smack in the middle.'
Only 19% of issuers have a strong ability to withstand 2016's challenges without significant damage to their credit profiles. Downgrades are projected to outpace upgrades by 10-to-1 in 2016, compared to 4.4-to-1 for 2015, 2.8-to-1 in 2014, and 0.5-to-1 in 2004-2013.
Approximately 53% of Fitch's Brazilian corporate portfolio has been assigned a Negative Outlook, while 6% has a Positive Outlook.
For more information, a special report titled 'Brazilian Corporates Credit Indicators - Carnival Provides Relief from Misery' is available on the Fitch Ratings web site at www.fitchratings.com.