The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Brazil: Financiers trade different experiences of the same country

Recent conversations with bankers and economists in Brazil have been confusing – sometimes it is hard to believe that both groups are talking about the same country.

rd_banner_column-780

First the positive bankers and traders: financial flows and assets have jumped in the last 14 months or so. The Bovespa has more than doubled as international investors have moved into one of the largest emerging markets.

The rally has also been enjoyed by many local investors, who rode the stock performance generated by a rapid fall in the country’s risk premium and lower debt servicing costs from the fall in the base rate. Selic (the central bank’s overnight rate) is expected to hit 6.5% – a record low. Just 14 months ago the central bank had Selic at 14.25%.

The lower ‘risk-free’ rate has created a small but important shift in domestic risk appetite, with bankers reporting healthy demand when raising new alternative asset investment vehicles, such as private equity, distressed debt funds and commercial real estate investments. And bankers confirm that many more of these non-traditional fund raising plans are in the works.

But despite the fall in interest rates, the real economy is failing to pick up momentum. True, it did return to positive territory in 2017, but barely. A 1% increase was a sideways move after a near 8% contraction in the preceding two years.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree