Private-Credit Firm Raises Distressed Fund as Defaults Surge

Root Capital, a Rio de Janeiro-based firm specializing in credit, is launching a distressed-debt fund as filings for bankruptcy protection reach record highs in Brazil.

“We continue to see stress in Brazil’s credit markets, the companies continue to go broke, the agribusiness sector is horrible, and the interest rates that people thought would start to fall now are going up again,” said Rafael Fritsch,partner and chief investment officer at Root Capital. “That puts more pressure on companies, generating a need for immediate liquidity.”

The plan is to raise about 500 million reais ($91.3 million) from local Brazilian investors this ...