The tide went out and showed who took a product thinking it was structure

The product delivered money; structure would have delivered tenor, protection, compatibility, and options — poorly designed debt turns monetary policy into a controlling shareholder.

The Selic went from 2% to 13.75% in little more than a year. The tide went out and showed who took a product thinking it was structure. During cheap money, any maturity looked long, any multiple looked justifiable, and any refinancing looked like a right. Now, contracts have fine print again.

Low rates do not merely make debt cheap. They alter behavior. Companies accept short tenors because rollover looks safe, investors buy credit at insufficient premiums, and managers confuse asset appreciation with competence. Abundant capital punishes whoever waits and rewards whoever moves first. Prudence looks like stupidity until the regime changes.

When the Selic rises, the problem appears in layers. First, new lines get more expensive. Then, floating-rate debt reprices. Next, consumers and clients cut demand. Finally, financial collateral and real estate can lose value because the discount rate rose. The debtor is attacked simultaneously in cost, revenue, and collateral. Models that test only one variable are not scenarios; they are decoration.

The company that took a generic bank product discovers that the bank did not finance its project. It financed its capacity to roll over. If the liability matures in twelve months and the asset generates cash in five years, solvency depends on a third party's future decision. The 2% rate masked the mismatch because the market was willing to repeat the contract. At 13.75%, repetition becomes analysis.

The investor also bought a product. Credit funds with daily liquidity carry assets that can take months to sell. While investors flow in, the incompatibility looks irrelevant. When they redeem, the manager must sell what is liquid, worsening the remaining portfolio, or mark assets that have no market. Liquidity promised to the liability cannot be manufactured by optimism about the asset.

The rate hike exposes the meaning of duration. A long fixed-rate obligation loses value when the market demands more. A floating-rate debtor preserves value for the creditor and transfers the shock to the company's cash. There is no neutral index; there is a decision about who carries the change. The entrepreneur who chose the CDI because the initial rate looked lower sold the bank an option on monetary policy without computing the premium.

That does not mean fixed rates are always better. Fixing expensive before a decline can destroy competitiveness. The point is to match the liability with pricing power, asset duration, and volatility tolerance. A company with indexed revenue can carry indexed debt. A thin-margin company with rigid prices should not turn every central bank meeting into an existential threat.

Shelf credit avoids this conversation. It offers working capital, receivables prepayment, overdraft, and installment loans. The name describes the bank's product, not the client's purpose. A structure starts at the asset: inventory purchase, acquisition, machine, contract, receivable, bridge, or expansion. Then it chooses tenor, amortization, index, and collateral. Inverting the order is dressing the company in whatever clothes are available and blaming it when they do not fit.

My position in 2022 would be to reduce exposure to debtors who depend on refinancing and to pay more attention to creditors with stable liabilities. Banks can gain from wider margins, but also face defaults and deceleration. The quality of the franchise shows in the capacity to reprice without destroying the client. A bank that charges everything immediately can show profit before it shows loss.

In private credit, I would re-evaluate operations against the new opportunity cost. A two-point spread over CDI could look acceptable when CDI was low; it remains two points when CDI rises, but the debtor's risk rose too. The higher nominal return creates an illusion of compensation. What matters is the premium over a risk-free alternative and the expected recovery. The principal did not become more protected because the coupon grew.

I would look for instruments with amortization, updated collateral, tested covenants, and identifiable payment sources. I would avoid long bullets dependent on future issuance, especially in cyclical sectors. The bullet maturity is a narrative: it promises the market will be open on an exact date. Amortization is a discipline: it returns capital while the thesis still works.

For stocks, I would look for companies that can turn cash into advantage. Acquisitions get cheaper, leveraged competitors retreat, and suppliers accept conditions. The strategic option of a strong balance sheet is worth more in tightening regimes. Valuation models rarely price that flexibility; they compute cash as an unproductive asset. At 2%, maybe. At 13.75%, cash is yield and ammunition.

The low tide also shows who grew only because it was financing clients. Retailers, platforms, and manufacturers may have sold revenue by assuming silent credit risk. When defaults rise, the commercial margin reveals that part of it was a badly calculated financial premium. Selling on credit is lending. Whoever does not define limits, collateral, and collection is running a bank without regulatory capital and without knowing it.

This point is bigger than fintechs. Every Brazilian supplier is, to some degree, a creditor. He grants terms to win the order, accepts the trade bill, and waits. The decision is usually commercial, based on relationship and quota pressure. The risk appears later, in collection. Under high rates, the cost of carrying receivables grows and delinquency destroys working capital. The sale that never gets paid was not a sale; it was a donation with taxes.

I see an opportunity in systems that unite commercial decision and risk. Before approving the order, compute total exposure, behavior, concentration, margin, and recoverable value. Recommend limit, tenor, down payment, and collateral. Monitor signs of deterioration. Start collecting before the client notices nobody is watching. Bank credit is only part of the problem; credit between companies is the forgotten layer.

The Selic hike will accelerate the hunt for prepayment. Companies will sell receivables to generate cash, but they must evaluate the effective cost and the quality of the assignment. Prepaying all the good flows can leave the balance sheet with bad obligations and no reserve. The receivable is an asset; using it repeatedly as anesthesia destroys flexibility. Structure is deciding which flows to finance and which to preserve.

Collateral also needs re-evaluation. A property appraised in a cheap-money period may not hold its price under high rates. Inventory ages, equipment depreciates, and receivables concentrate. Loan-to-value is not a number for the signing date; it is a variable to be monitored. The creditor who discovers the deterioration only at default did not have collateral, he had a memory.

The government and public banks may create lines for pressured sectors. They will relieve symptoms, but they will not fix incompatible liabilities. Refinancing bad debt over a longer tenor can save a viable company; it can also capitalize the interest of an insolvent one. The distinction requires analysis that broad programs try to avoid. Public policy must accept that not every debtor should be preserved.

For the entrepreneur, 2022 should produce an inventory. How much matures each month? What share is floating? Which collateral is committed? Which client represents concentration? How much cash is needed if receipts run thirty days late? Which asset can be sold? The company that cannot answer manages results, not risk. Results appear quarterly. Risk appears all at once.

The 2% cycle taught that money could be nearly free. The 13.75% cycle teaches that the price can change before the financed asset is ready. Neither regime is permanent. Structure must survive the transition. Debt that only works at one specific rate is a macroeconomic bet, even if the contract calls it working capital.

The tide went out and showed who took a product thinking it was structure. The product delivered money. Structure would have delivered tenor, protection, compatibility, and options. Now, the difference will be paid in interest, dilution, asset sales, or control. The lesson is not that credit is dangerous. It is that poorly designed debt turns monetary policy into a controlling shareholder.

Leo Bentier