High Interest Rates Weigh More Than U.S. Tariff on Companies, Warns Fitch

Written by Bruno Teles

Published on 28/07/2025 at 12:21

Brasil: juros altos sufocam setor corporativo mais que medidas dos EUA

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For The Rating Agency, High Selic Affects Corporate Cash More Than The New Import Tariffs Imposed By Trump

High Interest Rates Weigh More Than U.S. Tariffs For Companies, according to an analysis by Fitch Ratings published this week. The rating agency states that the Selic rate at 15% has a direct impact on the cash generation of Brazilian companies, surpassing the effects of the new 50% tariff announced by the United States.

In an interview with Valor Econômico, Fernanda Rezende, senior director of Corporate at Fitch in Latin America, highlighted that internal financial pressure tends to be more decisive in the coming quarters. The agency’s expectation is that interest rate cuts will only begin in 2026, keeping credit expensive until then.

High Selic Raises Debt Costs and Blocks Investments

The decision by the Central Bank to maintain high interest rates as a tool against inflation has increased the cost of capital for companies. Fitch assesses that, even with good liquidity at the moment, companies are anticipating the refinancing of debts, especially given the uncertainty of the electoral scenario for 2026.

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U.S. Tariffs Hit Few Sectors Strongly

High Interest Rates Weigh More Than U.S. Tariffs For Companies, Warns Fitch

Despite the political impact of the measures announced by Donald Trump, Fitch considers that the 50% tariffs will have a limited reach on the credit profile of Brazilian companies. The agency analyzed 14 companies with exposure between 3% and 50% to the North American market.

Embraer is the most sensitive, with up to 50% of its revenues coming from the U.S. Other companies in the intermediate range (11% to 30%) include Suzano, Prio, and Eldorado Celulose. In the lowest range (3% to 10%) are names such as Petrobras, Vale, Minerva, Dexco, CSN, and Tupy.

Debt Structure Defines Who Suffers More

According to Fitch, the origin of the debt is a key factor in measuring the impact of interest rates. Suzano, for example, with predominantly dollar-denominated debt, is less affected by domestic credit. In contrast, Eldorado, with liabilities in reais, suffers more from high Selic.

The response from companies has been conservative: delaying investments, cutting dividends, and focusing on preserving cash. The net debt/Ebitda ratio remains stable at 2.5 times, but the drop in commodity prices threatens this stability.

Public Debt Prevents Investment Grade

For Todd Martinez, head of the sovereign area at Fitch in Latin America, Brazil will be the most indebted emerging country in the coming years. Public debt is expected to reach 79.3% of GDP by 2025 and continue to rise.

With no consensus between the Executive and Congress to implement fiscal reforms, Brazil remains distant from recovering the investment grade lost a decade ago. According to the agency, only after the 2026 elections will there be political space to resume structural adjustments.

Do you agree that high interest rates are currently the biggest obstacle for Brazilian companies? How does this affect the future of the economy?

High Interest Rates Weigh More Than U.S. Tariff on Companies, Warns Fitch

For The Rating Agency, High Selic Affects Corporate Cash More Than The New Import Tariffs Imposed By Trump

High Selic Raises Debt Costs and Blocks Investments

U.S. Tariffs Hit Few Sectors Strongly

Debt Structure Defines Who Suffers More

Public Debt Prevents Investment Grade

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High Interest Rates Weigh More Than U.S. Tariff on Companies, Warns Fitch

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