SAO PAULO, Jan 30 (Reuters) - A growing number of large Brazilian companies will seek protection from creditors in 2017, hitting a record for a third straight year due to a harsh recession and tight credit conditions, bankers and lawyers said on Monday.
New bankruptcy filings from companies with annual revenue surpassing 50 million reais ($16 million) are expected to top the 227 requests last year, as publicly listed homebuilders and energy companies may seek in-court reorganizations, they said.
Reuters reported on Nov. 3 that PDG Realty SA Empreendimentos e Participações was considering seeking creditor protection if banks do not refinance the homebuilder’s maturing loans. PDG has repeatedly denied such a decision.
A bankruptcy lawyer who asked for anonymity to talk about the situation said PDG is not the only residential developer that could file for bankruptcy protection before June.
While declining to elaborate on the potential case, the lawyer said the inability of both builders to sell assets to raise cash could speed up their processes.
Last year, a record 1,863 Brazilian companies - most of them oil equipment, construction and manufacturing firms - requested court protection from creditors, about 45 percent more than in 2015, according to data from Experian Plc’s Brazilian unit. Rating agencies have warned that the risk remained high of more firms facing cash crunches.
For homebuilders, which have struggled with weak demand, sales cancellations and high borrowing costs, “we could see a few in-court reorganization cases in the first half alone,” said Gilberto de Abreu, president of mortgage lending group Abecip.
The outlook presents lingering risks to banks and investors such as pension funds that lent to or bought debt from a myriad of commodity, industrial and services companies earlier this decade after years of robust growth in Latin America’s largest economy.
Lenders have cut borrowing costs in recent years and extended maturities for corporate borrowers. Some analysts have said banks may have to refinance or renegotiate terms on more than 100 billion reais in loans over the next 12 months.
$1 = 3.13 reais Reporting by Aluísio Alves; Writing by Guillermo Parra-Bernal; Editing by David Gregorio