EM LATAM CREDIT: Brazil: After the Verdict - Negative

(BRAZIL; Ba1/BB/BB)

"AQ Podcast | Brazil: Bolsonaro’s Trial Begins" - Americas Quarterly

Journalist Patricia Campos Mello discusses potential outcome and repercussions from the trial verdict due next week. Most important is the U.S. reaction to the verdict and leaders in Brazil are braced for further sanctions.

That may put Banco do Brasil and possibly other Brazil banks in the crosshairs once again. We also wonder how the U.S. will react in other ways, possibly related to trade policy or other areas. Link to the podcast shown below.

It seems most people expect a guilty verdict and there is already substantial negotiating in congress over amnesty once the verdict is declared, but 58% of people polled object to amnesty.

It is interesting to note how amnesty discussions can be going on concurrent with the trial proceedings. Also, what will be the court reaction to the amnesty as it substantially cancels out the courts action, other than prohibiting Bolsanaro from running for office again. The court may overturn the amnesty and rule it unconstitutional.

There is potential for the U.S. To spread the sanctions currently on only one Supreme Court judge to other people as well as Banco do Brasil itself.

Any USD denominated transactions globally may fall under the sanction limitation so while it is unlikely this occurs it is still a risk worth watching. Financial institutions not complying with sanctions have been fined substantially so counterparties with Brazil banks have to comply as well.

Brazil leaders also expect this U.S./Brazil conflict will spill over into next year as the US basically tries to indirectly affect regime change through political pressure, especially with Brazil strengthening ties with China and Russia.

https://www.americasquarterly.org/article/aq-podcast-brazil-bolsonaros-trial-begins/