The surge in the dollar that hit R $ 5.90 last Tuesday, the highest level in the history of the currency against the real, increased by R $ 907 billion the total that banks and companies will have to disburse to cover debts abroad. Although foreign currency loans grew little in the period, the exchange rate variation makes it almost necessary R $ 1 trillion reais to pay the same commitments. According to the Central Bank, the total dollar debt of companies in Brazil is at US $ 482 billion (R $ 2.84 trillion).

The high exchange rate does not cause so much concern for Suzano Papel e Celulose, which also has dollar revenues.

Photo: Suzano Pulp and Paper / Press Release / Estadão

According to the BC, the situation is complicated for about 20% of companies Brazilian companies that do not have instruments to protect the exchange rate, called exchange hedge by the market, which would leave these projects totally vulnerable to fluctuations in the dollar. This hedge data is from 2018, but according to Carlos Antonio Rocca, coordinator of the Fipe Capital Markets Research Center (Cemec-Fipe), these companies have not significantly increased investment in protection instruments since then. “These businesses are at the mercy of the dollar and the 47% increase in the dollar makes life difficult,” he says.

Data from Fipe itself indicate that, on average, large Brazilian companies – with publicly traded and closed capital – are, at this moment, with 57.7% of its total foreign currency debt, an increase of more than 10 percentage points from the beginning of the year to now. “This increase happens because the dollar went up and unbalanced the proportion, which was previously a minority,” says Rocca.

Alone, publicly traded companies, which have more access to external resources, have expanded their exposure in dollar of 57.3%at the beginning of the year to 66.2%. Privately held companies were 35.9% for 45%. The Fipe survey covers a universe with 1,599 companies, being 288 open and 1,311 closed.

$ 482 billion

BC data show that the external debt of banks and companies totaled US $ 482 billion at the end of March. This figure includes bank loans, debt securities, commercial credit and intercompany transactions – for example, money that the headquarters of multinational companies send as a loan to local subsidiaries.

In dollars, the amount has not fluctuated significantly for five years. Converted to reais, the debt went from the equivalent of R $ 1.939 trillion in early January to R $ 2.846 trillion last Tuesday, the 13th – a difference of R $ 907 billion.

The scenario may frighten investors who receive with concern the data released in the current season of financial statements, but it takes time to know the real impact of the dollar on the companies’ cash. This is because only a small part of this debt is short-term, the rest will be paid in the coming years.

Even so, financial market analysts carefully observe the moment, According to them, although large companies today protect part of the debt with tools available in the market, there are still those very exposed. “Companies in the airline industry, some importers and retailers still invest little in hedging,” says a foreign exchange operator who asks not to be identified.

One example is Azul Linhas Aéreas. The company today has a gross debt of R $ 20 billion, but from that amount, R $ 14 billion refer to aircraft leasing, therefore in dollars. In its last balance sheet, the company states that it hedges only fuel costs, purchased in foreign currency. Leave it at that 70% of its debt floating with exchange rate moods.

In a note, Azul informs that, to minimize the rise in the dollar, it negotiated a postponement of the payment of aircraft leases, but did not inform the new terms. “In this scenario, we use a natural hedge that is basically increasing the price of tickets to offset the pressure on costs due to exchange rate variations,” he says in a note.

Natural protection

Other companies, in addition to Azul, also have a large part of their debt in dollars. But because they are exporters, they receive in dollars and, therefore, they are not concerned with the acquisition of financial products that hinder the dollar exchange rate.. This is the case of Suzano, which produces paper and cellulose. Exchange and monetary variations negatively impacted Suzano’s financial result in R $ 12.420 billion in the first quarter of 2020, but this tends to be relativized by the investor. Around 94% of the company’s gross debt is calculated in dollars. At the same time, 83% of its net revenue in the period was generated in the foreign market.

“We remain optimistic about the investment thesis and maintain the purchase recommendation (for Suzano’s shares”, wrote last Tuesday the XP Investimentos analyst Purple Betina.

“We need to share the effect of the dollar on the debt. One thing is to mark the debt and another and the actual payment. The debt explosion has an effect on the balance sheet now but has no cash effect in the future”, says the director-director bank general Indosuez, Fábio Passos.

The BC periodically estimates the total external debt of companies without exchange protection. The most recent data, from April, points to the value equivalent to 3.1% of the Gross Domestic Product (GDP) – this proportion was 9% in 2016.

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