UPDATE 1-Brazil currency hedging jumps in September as outlook worsens

miércoles 14 de octubre de 2015 18:06 GYT

(Adds comments, currency performance, background throughout)

SAO PAULO Oct 14 (Reuters) - Brazilian companies stepped up U.S. dollar purchases in September at the fastest pace in six months, seeking to protect themselves against a slumping local currency, data from clearinghouse and market data provider Cetip SA Mercados Organizados showed on Wednesday.

Companies bought $21.4 billion worth of so-called currency term contracts last month, the biggest amount since March, as the real shed 9 percent against the dollar in September alone, the data showed. Companies sold $10.9 billion, the lowest since December.

The numbers underscored growing concern among corporate managers over the rapid surge in debt refinancing and hedging costs amid political and economic turmoil in Brazil this year. The real is down 32 percent this year, making it the world's worst-performing major currency, according to Thomson Reuters calculations.

Fabio Zenaro, head of products and business at Cetip, said the increased use of cross-currency swaps and similar instruments in spite of their high cost is allowing more Brazilian firms to convert dollar debt into local currency risk, trimming their effective exposure to sudden fluctuations.

"Risk management has become more active," Zenaro said in an interview. "It will be hard to see companies being caught off guard, since the numbers suggest they're prepared for more volatility."

The real touched an all-time low last month. It was almost unchanged at 3.8116 reais to the dollar on Wednesday.

Debt exposure to foreign currencies looks manageable for most Brazilian companies, which are increasingly using derivatives, including currency term contracts, to help shield their balance sheets from sudden interest-rate or currency fluctuations. (Reporting by Guillermo Parra-Bernal; Editing by Christian Plumb and Grant McCool)