CORRECTED-Real slump bites Brazil's CSN, others despite debt hedging efforts

miércoles 26 de agosto de 2015 18:28 GYT
 

(Corrects to say Hypermarcas repurchased bond due in 2021, not perpetual bond in paragraph 22)

By Guillermo Parra-Bernal

SAO PAULO Aug 26 (Reuters) - While many of Brazil's largest companies have grown savvy about hedging their debt against big currency swings, an increasing number could feel the heat from the real's plunge to a more than 12-year low due to poor planning and rising debt, bankers said.

Debt refinancing and hedging costs are rapidly rising as Brazil's economy falls into recession and local banks pare back credit. The real, the world's worst-performing major currency this year, according to Thomson Reuters calculations, slipped below 3.65 to the dollar on Wednesday.

Companies such as steelmaker Cia Siderúrgica Nacional SA and General Shopping Brasil SA are already suffering after borrowing heavily in global markets. The 38 percent decline in the real over the past 12 months has forced them to downsize operations as debt-servicing costs soared.

Bankers say debt exposure to foreign currencies looks manageable for most companies, which are increasingly using derivatives to help shield their balance sheets from sudden interest-rate or currency fluctuations.

Still, some wonder how long hedging will keep companies safe as the currency continues to slide.

Analysts point to state-controlled Petroleo Brasileiro SA , the world's most-indebted oil producer, airline Gol Linhas Aéreas SA and port operator Wilson Sons Ltd , as firms that may face potential problems.

Outstanding foreign debt at companies and banks in Latin America's largest economy reached $418 billion this year, almost three times the amount they owed in 2008.   Continuación...