Brazilian Banks Seen Struggling in Lower Rate Environment

Brazilian Banks Seen Struggling in Lower Rate Environment

Bonds Structured Finance Brazil Economy & Policy Corporate & Sovereign Strategy

Last week’s further chopping of the Selic benchmark underscores the Brazilian government drive to lower interest rates, continuing to dim the outlook for Brazilian banks already grappling with higher delinquencies. With GDP numbers remaining weak, bold government action seems set to continue. In the long term, credit stimulus measures “choke capital markets which already face very strong headwinds from subsidized credit,” Mauro Cunha, president of the Association of Investors in Capital Markets

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