Brazil's Record Overseas Borrowing Comes Back to Bite Companies
- Brazil companies' foreign debt rose seven fold in past decade
- Corporate bonds from Brazil are region's worst performers
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Brazilian companies including state oil producer Petrobras are at risk from a weakening real after they issued a record amount of debt in foreign currency. The mismatch prompted President Dilma Rousseff to say over the weekend that she’s “extremely concerned” about the situation.
Borrowing in overseas markets by non-finance companies reached a record $137 billion last year, seven times the level just a decade earlier, according to the Bank for International Settlements. Petroleo Brasileiro SA, with $56 billion of outstanding bonds, has become the world’s largest non-investment grade corporate issuer after Standard & Poor’s cut its rating this month following a similar move by Moody’s Investors Service.