According to the Focus Bulletin, released in February, economists estimate that the Selic rate will reach 9% in 2024. The latest statement from the Monetary Policy Committee (Copom) indicated that the pace of interest rate cuts will be maintained in the next few meetings. As a result, it is likely that there will be two further reductions of 0.5 percentage points at the March and May meetings. It currently stands at 11.25% per year, the lowest level since March 2022. In addition, inflation is expected to fall, with the IPCA below 4%, and GDP is expected to grow, albeit modestly, reaching 1.60% in 2024.
The global outlook has been less adverse. In this sense, financial market experts expect the US interest rate to fall from March onwards, since inflation is under control in much of the world (in the US, part of Europe and Brazil, albeit to a lesser extent) and concerns about a global recession have diminished.
All these factors contribute to a more optimistic outlook for the Brazilian economy, which can bring some opportunities for companies, both those wishing to expand their business and those that need to restructure and negotiate debts.
In this way, the fall in interest rates can represent new possibilities for companies to restructure debts, raise funds to invest in expansion, modernization and growth, as well as diversify operations, increase production capacity and develop new businesses, among other things.
However, regardless of the organization’s needs, it is crucial to pay attention to the legal viability of the operations, the possible impacts on the corporate structure and the risks involved in the processes, especially when it comes to taking out credit.
Entrepreneurs tend to take calculated risks. Estée Lauder, the great cosmetics magnate, once said that “risks are the cornerstone of empires”. Even if they are large, structural risks, they are known, perceived or born of an intuitive awareness of the reality and stability of the market.
First-order risks, when they are political or related to major events, are usually quickly incorporated by companies. But when business risks are affected by a change in vision and interpretation of factors that were not evident to the market, even though they might have been known, the entire organization begins to suffer at an uncontrolled pace.
Among these risks that were already signaling changes without their full extent being made clear are those relating to credit and indebtedness in general.
As mentioned, there seems to be a cheaper supply of credit on the market, if we compare the nominal value of interest rates with previous periods. However, what is not revealed is that the conditions for accessing this credit have become more complex, with many more risks inherent in any future payment difficulties.
In addition, it is important to highlight the legal risks, which have been declared to the market with changing jurisprudential understandings, overlapping laws and even the occurrence of a typically Brazilian phenomenon: the law that doesn’t stick.
In 2021, for example, indicating a concern with credit itself and still under the effect of the Covid-19 pandemic, Law No. 14,181 was issued, which dealt with over-indebtedness, focusing on individuals.
Although it is not directly related to business debt, the fact is that the legislative concern at the time was to prevent credit from being granted as an easy solution, only to result in more severe difficulties. The Judiciary is often faced with cases in which debtors are in debt far beyond their ability to pay.
Although the rules of the Over-indebtedness Law do not apply to companies, there were signs of principles of responsibility in the granting of credit by financial institutions, which were beginning to have to exercise greater diligence about the payment capacity of debtors, whether individuals or companies, considering all the debt data available.
When it comes to companies, the scenario is different. Today’s interpretation of the application of the Business Recovery and Bankruptcy Law, which was inspired by a US model, is contrary to the objectives envisaged by the legislator. The focus of the law, which was to maintain jobs, the source of production and the interests of the market, has been replaced by a complex and costly approach.
The aim is less to recover economic activity and more to satisfy credit, granted without due responsibility for assessing the borrower, which should be intrinsic to the financial institution’s risk.
This change in judicial perspective, during the term of existing contracts, has significant impacts on the risks that entrepreneurs believed they had assumed when taking out credit. This challenge is often not identified in advance due to the absence of specialized legal advice.
In summary, financing with third-party capital is one of the pillars of business economic acceleration, and the current macroeconomic scenario and falling interest rates can bring opportunities for companies looking to expand their operations or renegotiate debts. However, they need to be aware of the risks in order to make more strategic decisions and maintain business continuity.
–> Read also: Corporate structuring in agribusiness: alternatives for accessing credit in Brazil
