BRAZIL Trends and Developments Contributed by: Thiago Fernandes Chebatt and Luiz Eugênio Araújo Müller Filho, Müller Chebatt Advogados
The Point Everyone Misses: In Brazil, Practical Enforceability is Part of the Credit Itself Private credit in Brazil heading into 2026 is best framed through a single idea: practical enforceability. This is not a commentary on the sophistication of Brazilian law – creditors do have tools, and the market is well- versed in secured structures. The difference is practi - cal: outcomes are often determined by whether rights can be implemented in time to preserve value, not by how elegantly the protections are drafted on paper. In calmer markets, documentation can sometimes be treated as a faithful record of the deal, with an implicit assumption that, if something goes wrong, enforcement is “just” a process. Brazil rarely behaves that way. Registry formalities, interim relief dynamics, procedural manoeuvres and stakeholder behaviour under stress can turn a well-priced credit into a slow, expensive dispute if the structure was not designed for real-world friction. Time is not neutral in credit. Delay erodes leverage, increases information asym - metry, and can allow value to migrate away from the collateral perimeter. That is why legal advice in Brazil has a direct, meas - urable impact on returns. The value is not limited to drafting protections. It lies in anticipating how a dis - pute is likely to be fought; how long perfection will actually take; which attack surfaces are most likely to be used against collateral; and what changes when a borrower migrates into a judicial reorganisation. The most resilient private credit deals tend to treat legal architecture as part of underwriting from the outset, with a clear view on how the downside will be man - aged in practice, not in theory. Brazil’s private credit market also intersects with spe - cial situations in a way that is not always captured by a traditional “loan against assets” narrative, and this channel is gaining relevance going into 2026. A mean - ingful opportunity set exists in claims-based investing: the acquisition or financing of legal claims, including court-recognised credits (such as “ precatórios ”) and monetary claims against counterparties that are often solvent and institutionally relevant, such as banks, multinational groups and state-controlled enterprises. In these structures, the claim may serve as collateral through an assignment of proceeds and control of the
collection strategy, or it may be the core asset via a full or partial assignment, sometimes combined with funded participation mechanics. Here again, practical enforceability is the real under - writing variable. Returns depend less on abstract legal rights and more on the procedural posture of the case, the robustness of the evidentiary record, the realistic range of defences, limitation and set-off risk, assign - ability constraints, and the timing and mechanics of collection. For that reason, thorough legal diligence and well-supported legal opinions are not a formal - ity; they are often the foundation of the investment thesis. When structured carefully, claims-based col - lateral and claim acquisitions can offer an alternative channel to deploy capital with a clearer enforcement map – particularly in a jurisdiction where outcomes are ultimately shaped by how, and how fast, rights can be implemented in practice. Presidential Elections Brazil’s 2026 election cycle will be a focal point for markets, and it matters for private credit even when the underlying portfolio is not “political”. Credit does not price campaign slogans; it prices credibility: fiscal anchors, coherent tax policy, predictable regulation, and institutional stability. When those signals become noisy, risk can reprice without a headline crisis. Uncer - tainty about direction is often enough. Election years also tend to bring calendar-driven pres - sure points. Budget debates and sectoral promises generate “trial balloons” that can move the rates curve and the Foreign Exchange (FX) market well before any measure is adopted. For lenders, the practical response is to stress-test covenant headroom and refinancing plans for a wider range of scenarios, including short windows of market closure, abrupt spread widening, and weaker access to hedge lines. Under those conditions, liquidity planning often mat - ters more than macro forecasting. Election years also tend to magnify refinancing and dispute risk. Borrowers with maturities concentrated around the election window may face shorter tenors, higher spreads, and tighter collateral release terms. At the same time, the market’s tolerance for weak cov - enants tends to drop sharply after a period of compla -
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