Courtesy of Mish.
Perfect Storm
Reader Lucas from Brazil writes about the “perfect storm“.
Hello Mish
Brazilian interest rates are skyrocketing. Rates went up more than 2 percentage points in a month. Bond trading was suspended due to the quick devaluation.
Nobody is talking much about it, but energy corporation Petrobras is down 95% from the peak (in dollars). They have a high dollar exposure, and some estimates say that since June, Real devaluation alone was responsible for a +R$100B increase in debt.
Brazil’s majors oil investments are in (really) deep water drilling, and they may be not worthy anymore. Petrobras debt is now equivalent to 8% of the whole country GDP.
And while. our president doesn’t have support to do anything.
It’s a perfect storm here.
Lucas
Petrobras
In classic bubble action, shares of Petrobas went from $4 to $77 back to $4. Executives no doubt, cashed out at every opportunity.
Brazil Real…
