Read this Thursday’s edition of the FolhaMercado newsletter (15) – 06/15/2023 – Market

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S&P changes outlook on Brazil rating

One of the three most important risk rating agencies, S&P Global improved this Wednesday (14) the long-term perspective of Brazil. The credit rating was maintained at BB- (or B in local currency), but the agency revised the outlook from “stable” to “positive”.

It is the first review since December 2019 by S&P, which was the first to withdraw the country’s investment grade in 2015. Fitch and Moody’s, the other two giants in the market, also rate Brazil at BB-, but with a perspective ” stable”.

What explains the change in the country’s outlook, according to S&P:

• Better-than-expected economic growth;
• Signs of stability in the conduct of fiscal and monetary policies.

Two scenarios: the agency also reported what would make it raise the country’s credit rating or revise the outlook back down.

On the positive side, the government’s ability to adopt pragmatic economic measures. The key to this would be the approval of additional reforms – including the tax one.

On the downside, an inadequate political framework, or if economic policy results in limited growth for the country, “leading to further fiscal deterioration and a higher-than-expected debt burden.”

Why it matters: this type of classification is taken into account, for example, as an investment criterion for large overseas funds – some giants only place money in investment grade countries.

Reaction: the dollar extended the fall, to R$ 4.81, and the Exchange accelerated to close in advance of 1.99% after the S&P updated the perspective on the Brazilian note.

Alphabet soup: S&P, Fitch and Moody’s use similar denominations to evaluate countries’ credit scores.

• They start from CC (or Ca, for Moody’s), through CCC-, CCC, CCC+, B-, B, B+… and so on until you reach investment grade, which is from BBB- to AAA.

• That is, even with the review, BB- do Brasil still needs to go up three floors (BB, BB+, BBB-) to reach investment grade.

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Bud Light ceases to be best seller in the US after boycott

After being boycotted by conservative sectors of American society, Bud Light lost the position of best selling beer in the country in recent weeks.

Who took the lead was the Mexican Modelo, manufactured in the USA by Constellation Brands. she added 8.4% of market share over a four-week period through June 3.

Bud Light, from the giant AB InBev, saw its sales drop to 7.3% of the total in the period. Until April, they revolved around 10%.

Remember: in early April, trans influencer Dylan Mulvaney, who has millions of followers on social media, published a video advertising the brand.

• She showed six beers she received with a drawing of her face emblazoned on the can, to celebrate one year since she publicly came out as trans.

Conservative groups have since launched a boycott campaign, accusing the beer of sponsoring transgender agendas, “mocking” women and exposing children to sexuality.

The manufacturer announced the departure of two marketing executives, but the company’s attempt to back off drew new criticism, this time from progressives and members of the LGBTQIA+ community.

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New road rules

A new government federal highway concession policy should provide for discounts for frequent users and the adoption of “free flow” (non-stop) tolls up to the fifth year of the contract.

Understand: with the model, charging is done by automatically reading license plates or tags, without the need for drivers to stop at booths.

The idea is that each person pays only for the stretch they travel. It is different from what happens today. Vehicles of the same size pay a flat rate, regardless of how many kilometers they travel.

The free-flow model has already been tested in São Paulo and should be used on the northern section of the Rodoanel. The state highway will have a camera that reads license plates and is capable of identifying characteristics such as height, dimensions and width of vehicles.

Other news from government policy for new concessions:

• Drivers who use the same road many times must have progressive toll discounts;

• There would even be rebates for payment tag users;

• Sustainability initiatives, such as charging points for electric vehicles in user support areas.

the first auction made under the new rules should be the two lots of roads in Paraná, which add up to 1,077 km of roads. It is scheduled for August.

The winner who charges the user the lowest fee, but with a limit on discounts, will be defined. The objective is to prevent companies from giving offers so low that they are not enough to pay for the operation.

In numbers: five major public notices for road concessions should come out this year, totaling R$ 66 billion in investments and operating expenses.

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Americanas had a shortfall of R$ 25 billion

Americanas disclosed this Wednesday that the former board caused a gap in BRL 25.3 billion on the retailer’s balance sheet. Most of this value was inflated by a profit that did not exist over the last few years (it is not known since when).

In order to get around the analysts and make the balance sheet a credible document, the former executives of the retailer, as the company accuses, had to make accounting maneuvers that reached almost double: R$45.9 billion.

on one sideAmericanas inflated its profit by recording on its balance sheet a value lower than what it actually paid for the goods.

This was done with supposedly fictitious contracts in which manufacturers give discounts on goods in exchange for exposure in the retailer’s campaigns – the operation (with real contracts) is common in the sector.

From the otherthe company needed to compensate for the reduction it had created in the suppliers account (with the discounts) and which, in fact, would be paid in full (plus interest) in operations with drawn risk.

This is another common operation in the sector and is characterized by the supplier anticipating with the bank the amount that he has to receive from the retailer, which, at the same time, extends the original payment term also with the bank, paying interest.

• Understand here why the company incorrectly accounted for the operation in the balance sheet.

More about the case

• Accused by Americanas of having participated in the fraud, the former president of the company Miguel Gutierrez plans to leave Brazil. The information was revealed by people close to the executive, according to the column Panel SA