Brazil Corporate Debt Costs Near 24% as Moody’s Warns of a 2027 Squeeze
Business · Brazil
Key Facts
- —What happened Moody’s said on Tuesday 29 September 2026 that pressure on Brazilian company finances will run into 2027.
- —How big The agency projects that the combined operating earnings of Brazilian companies will fall by more than 3% in 2027.
- —The catch Brazil corporate debt has barely cheapened: new company loans averaged 24.19% in August 2026, against 24.93% a year earlier.
- —Who feels it Moody’s names airlines, transport, chemicals and steelmakers, plus power producers and farmers exposed to El Niño.
- —What could ease it Economists surveyed by Brazil’s central bank see the policy rate down at 12.00% by the end of 2027.
Brazil corporate debt still costs close to 24% a year on new bank loans, even after five cuts in the policy rate. Moody’s expects the squeeze to last into 2027.
Brazil corporate debt is not getting cheaper, even though the central bank has been cutting interest rates since March. The rating agency Moody’s says the pressure on company finances will last into 2027.
Moody’s published that assessment on Tuesday 29 September 2026. It projects that the combined operating earnings of Brazilian companies will fall by more than 3% next year.
What the agency said
Two Brazilian outlets carried the report the same day. The weekly magazine Veja summarised it, and the São Paulo financial service Finance News ran a longer Portuguese version.
Finance News ran it under the line that tighter conditions will keep pressing the credit quality of Brazilian companies. The subject is non-financial and infrastructure companies, not banks.
Moody’s points to heavy borrowing, thin liquidity and governance risk as the weights on credit quality. Slower economic growth and weaker household income make it harder to raise sales and cover the extra cost.
Companies with large debts falling due by 2028 will have to refinance, the agency says. Neither Brazilian account of the report gives a figure for how much debt that is.
The policy rate has fallen, the loan rate has not
Brazil’s benchmark interest rate is called the Selic, and a committee at the central bank sets it. It stands at 13.75% a year, in force since 17 September 2026.
A year ago it was 15.00%. Five meetings in a row have cut it by a quarter of a point each since March 2026.
Those decisions and their dates are published by the Banco Central do Brasil. The cuts add up to 1.25 points in six months.
Companies have felt almost none of that. The average rate on new bank loans to Brazilian firms was 24.19% a year in August 2026, against 24.93% in August 2025.
That is a fall of 0.74 of a point while the policy rate came down 1.25 points. Both figures are published by the central bank.
What inflation is actually doing
Brazil’s official consumer price index is the IPCA, compiled by the statistics agency IBGE. It rose 4.22% in the twelve months to August 2026, and prices fell 0.32% during August itself.
That twelve-month rate has eased every month since May 2026, when it reached 4.72%. September’s reading has not been published yet.
The central bank aims at 3%, with a tolerance band of 1.5 points either side. Inflation is therefore inside the band and above its centre.
Which companies Moody’s singles out
Fuel and freight are the first pressure point. Airlines, transport operators and chemical makers all buy a lot of energy, and the agency expects their margins to narrow.
They can pass part of the increase on to customers. Moody’s does not expect that to cover the whole of it.
Brazilian steelmakers face a different problem: cheaper imported metal, above all from China. The agency expects that competition to press them through 2027.
For Petrobras, the state-controlled energy company, the risk runs the other way. High crude prices raise the political stakes in domestic fuel pricing, and limited price rises cap what the company keeps.
Weather is the last factor. A strong El Niño would cut the water flowing into hydroelectric reservoirs and push up the cost of generating power, Moody’s says.
Growers of soy, corn, wheat, coffee and sugarcane could lose part of a harvest, depending on the region. Smaller grain crops then raise feed costs for meat producers.
What would ease the squeeze
The rate-cutting cycle is the main relief, and it is already running. Economists surveyed for the central bank’s weekly Focus report put the Selic at 12.00% by the end of 2027.
That reading is dated 25 September 2026, and the number is the economists’ median forecast. It is not a target announced by the central bank.
Export earnings are the second cushion. Brazil sold US$250.9 billion of goods abroad in the first eight months of 2026.
That is about 10% more than in the same months of 2025. The trade surplus over the period reached US$55.3 billion, against US$43.2 billion a year earlier.
Those figures come from the trade ministry’s Comex Stat database. Export revenue is cash earned from sales, and it does not depend on Brazilian bank credit.
Slower inflation matters too, because it is what allows the central bank to keep cutting. Companies with little debt and steady cash will feel much less of this than heavy borrowers.
What it means for people with money in Brazil
For anyone holding Brazilian company bonds, the message is about margins rather than failure. Both Brazilian accounts describe pressure on earnings and on refinancing, and neither names a company at risk of default.
For savers, a high policy rate still cuts both ways. The Selic that squeezes borrowers is also what keeps Brazilian fixed-income returns comfortably above inflation.
For employees and suppliers, the sign to watch is how new spending is funded. Finance News reports the agency warning that firms financing big investments with short-term money face rising liquidity risk.
Moody’s frames all of this as a two-year stretch rather than a turning point. The policy rate is already heading down, and the cost of company credit has yet to follow.
More: Brazil coverage, every day from The Rio Times.
Frequently Asked Questions
What did Moody’s forecast for Brazilian companies?
The rating agency said on Tuesday 29 September 2026 that credit quality at Brazilian non-financial and infrastructure companies will stay under pressure into 2027. It projects that their combined operating earnings, measured before interest, tax and depreciation, will fall by more than 3% in 2027. It points to high interest costs, heavy borrowing, slower growth, dearer fuel and freight, and the risk of a strong El Niño. Neither Brazilian account of the report gives a figure for how much company debt falls due before the end of 2028.
What is the Selic and where is it now?
The Selic is Brazil’s benchmark interest rate, set every few weeks by the monetary policy committee of the Banco Central do Brasil. It has stood at 13.75% a year since 17 September 2026. That follows five reductions of a quarter of a point each, beginning in March 2026, from a level of 15.00%. The central bank publishes each decision with its date on its own website.
Why is Brazil corporate debt still expensive if the policy rate is falling?
Banks do not pass a policy rate cut straight through to borrowers. The average interest rate on new bank loans to Brazilian companies was 24.19% a year in August 2026, against 24.93% in August 2025, according to the central bank’s credit statistics. That is a fall of 0.74 of a point, while the Selic came down 1.25 points over the same period. The series measures new loans agreed in the month, not the cost of debt already on company books.
Is Brazilian inflation rising?
Not on the latest published reading. The IPCA, Brazil’s official consumer price index, rose 4.22% in the twelve months to August 2026, the most recent month released by the statistics agency IBGE. Prices fell 0.32% during August itself. The twelve-month rate has eased in every month since May 2026, when it reached 4.72%. Brazil targets inflation of 3%, with a tolerance band of 1.5 points either side.
Sources: Veja on the Moody’s report of 29 September 2026, Finance News with a fuller Portuguese summary of the same report, Banco Central do Brasil on every Selic decision and its date, Banco Central do Brasil on average interest rates for company loans, IBGE on the IPCA consumer price index, Banco Central do Brasil on the Focus survey of economists, Brazil’s trade ministry on exports and imports
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