Almost 70% of businesses in Rio de Janeiro defaulted in the last quarter – IFEC survey

RIO DE JANEIRO, BRAZIL – According to a survey by the Fecomércio Institute of Research and Analysis (IFEC), the level of default by companies in Rio reached an impressive 67.3% over the past 3 months. Among this percentage, 42.8% defaulted with suppliers and 42.4% failed to pay their rent.

Wilton Alves, Director of Asset Management for Sergio Castro Imóveis, says commercial rent defaults hit a record high in April: “By April 5th, almost 75% of commercial tenants in the central region had not paid their rents. Among them are many who have never been in default, and also some large chains. The default of downtown tenants is the most worrisome. After the long holiday declared by the city government, the number of defaults has broken all records.”

Wilton explained that even tenants granted discounts are in default. “Most landlords waived or deferred the annual IGP-M (Market General Price Index) readjustment this year because it reached 30%,” he concludes, recalling that a bill to remove this index from rent readjustment is being discussed in the Federal Chamber, and to replace it by the IPCA (Broad Consumer Price Index), which has much lower increases.

According to data released by Fecomércio-RJ, among the 67.3% of retailers who said they were in default, 23.7% said they were very late with payments. On the other hand, 32.7% of all Rio merchants declared their accounts are up to date.

As for the situation of companies in Rio de Janeiro in the last quarter, 31.5% said it had deteriorated, and 51.8% said it had greatly worsened, from a total of 83.3%. Among entrepreneurs who mentioned a deterioration, 95.7% credit it to the worsening of the pandemic.

A total of 65.6% intend to seek new credit lines from a financial institution, should it be possible. The main reasons mentioned for the need of capital were for use as working capital (49.2%), stock formation (28.9%), debt refinancing (28.9%), current expenses (light, telephone, etc.), debts with suppliers (26.2%), taxes (municipal / state / federal) (21.1%), rental debts (19.1%) and payroll (15.2%). It is worthy of note that 79.3% mentioned more than one reason.

The survey was conducted by IFEC RJ – Instituto Fecomércio Institute of Research and Analysis with entrepreneurs from the State of Rio de Janeiro, between April 1st and 4th.

Source: Diário do Rio