Americanas raises corporate debt concerns in Brazil

Significance

Unforeseen losses of BRL43bn (USD8.2bn) discovered in its balance sheet in early January prompted a sharp fall in the company's share price. Uncertainty regarding the undeclared amount itself and the exposure of large Brazilian financial institutions to a potential default have raised corporate debt risk. Several other companies have also faced financial difficulties recently.

Impacts

• Americanas’s creditors will limit debt refinancing to other retail companies.
• The case has exposed potentially widespread flaws in auditing and regulatory systems.
• Stock market volatility and further falls are likely in the face of a potential Americanas default.