Ambev’s Shares Rise on Favorable Change to Interest Payments

by webmaster

Ambev, a Brazilian brewery company, experienced a 2.5% increase in its shares following reports that the government may introduce a less negative change to the rules regarding payments of interest on capital to shareholders.

As of now, the shares are valued at 13.63 reais, equivalent to $2.77, which represents an 8.4% decrease from the end of last year up until Wednesday’s market closing. On the other hand, Brazil’s benchmark Ibovespa stocks index showed a 0.4% increase in mid-afternoon trading.

According to a report by Brazil’s Valor Economico news organization, there is a proposed rule that limits the amount companies can pay to shareholders as interest on capital. This proposed rule has been considered positive for Ambev by analysts Leonardo Alencar and Pedro Fonseca from XP Investimentos. They mentioned in a research note that this change could benefit the company. However, it is important to note that the government has not yet released an official proposal.

Investors were initially anticipating a more negative approach, but XP Investimentos suggests that the potential change could be more favorable for Ambev. Payments of interest on capital serve as a means for companies to reward their shareholders while also reducing their tax burden.

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