Brazil: Local markets on a roll
Latin nations' equity and debt markets are seeing greater issuance activity
Brazil's capital markets are suddenly looking attractive, at least for corporates seeking new funds. What was once a moribund platform is now evolving into a key source of funding for Brazilian companies, building on the country's new-found economic stability. Eleven companies have tapped the São Paulo Stock Exchange (Bovespa) so far this year, including Brazil's third-biggest private sector bank, Unibanco, while five issues were IPOs.
This builds on last year's activity when 16 companies issued shares on the Brazilian bourse, of which seven were IPOs, one by fast-growing budget airline Gol. According to Alfried Ploger, president of Abrasca, the association of publicly traded companies, Brazil has not seen this level of issuance since before the Asian crisis of 1997. This time, though, the companies are much more solvent. "The next few years are looking quite auspicious," says Ploger. "The Brazilian stock market is enjoying one of its best moments, especially in the secondary market."
Corporate bonds are also doing a thriving trade, increasing issuance of debentures to about $10 billion in the first six months of 2005, compared with less than $4 billion in the whole of 2004. The maturity of commercial paper is lengthening, moving from just a few months to up 10 and 20 years.