High Interest Rates Punish Expansion Plans, Says ARX Executive Pierre Jadoul

Pierre Jadoul, executive director of private credit strategy at ARX Investimentos, stated that sustained high interest rates in Brazil are hurting corporations that planned expansion during a much lower cost of capital environment. In a conversation with Stock Pickers presenter Lucas Collazo, Jadoul argued that simply noting higher debt costs is an incomplete view of the current market dynamics. He traced these issues to the post-pandemic cycle where long-term rates hovered around 7%. That baseline spurred aggressive organic growth and acquisition strategies among high-quality credit companies, effectively doubling their capitalization costs due to the rapid monetary policy shift in late 2021. Jadoul emphasized that the current restrictive period differs from past tight cycles because it will last for five or six years starting from a very low base. Consequently, companies currently executing large-scale projects face prolonged pressure on their financial margins.