JGP’s Fritsch on Navigating the Nascent Distressed Corporate Credit Market in Brazil

Rafael Fritsch, founding partner and chief investment officer of Rio de Janeiro-based JGP Credito Root Capital, spoke to Bloomberg’s Nathaniel Baker about the distressed market in Brazil. Fritsch’s firm, a partnership between JGP Credito and Root Capital LLP, launched a $250 million fund in June.

Q: Can you give our readers some quick background on the distressed market in Brazil?

A: The total credit market has grown by 20 percent over the last 10 years, which is unprecedented. Ten years ago, with a R$200 billion ($99 billion) credit market, 7 percent of which was distressed, we were talking about a R$14 million distressed market. Today the credit market is R$2 trillion.

Q: Sounds like there should be lots of opportunities for hedge funds and others?

A: Some people have tried in the past. The Brazilian legal and restructuring environment is way tougher than most countries I have experienced. I spent 10 years doing distressed in Europe. When you look at France, Italy and Spain, they’re very complex places to restructure businesses. I would say Brazil is even tougher than those countries.

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