Brazil's low-growth environment and cash-flow concerns corporates

Rise in Brazil's debt service requirements is not the real concern at this point of time. External debt to Brazil's corporate is still among the lowest in the EM world. FX reserves remain at a healthy level that would provide the BCB and the government with enough room to manage the situation on the external front. 

However, the banks and corporates are likely to face potential channels of risk in the form of lower cash flow (due to the low-growth environment) and the economy-wide financial outflows, which could lead to a decline in FX reserves challenging the BCB and government's ability to contain the damage. 

"However, based on the assumption that dollar GDP will stop contracting next year and the economy will return to growth in the medium term, the debt situation remains manageable at this point in time", says Societe Generale.