Corporate borrowers in Brazil will face headwinds next year, including flagging loan disbursements, a cautious consumer spending outlook that might affect sales, as well as low capacity utilization in certain industries, analysts at Fitch Ratings led by Joe Bormann, said on Monday. According to Bormann, “Fitch is pessimistic about the ability of Brazilian corporates to materially strengthen their credit profiles during 2014 due to sluggish economic conditions.”
Likewise, the ratings company sees similar challenges in other countries, including Argentina - where nine companies are currently bearing “negative” outlooks on their debt ratings because of high inflation, increased government meddling, economic uncertainty, and limited access to debt markets.
While the near-term outlook for Colombian corporate borrowers is stable to slightly positive, major risks include aggressive growth strategies that could result in negative free cash flow. The prospects for Mexican corporates are slightly positive for next year too, Bormann said, adding that the economic impact of a package of economic reforms being voted in Congress “will take a while to trickle down to the economy.”