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. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Brazilian FIG: wind has gone out of international sales

Lower local rates have increased price and increased demand onshore.

International financial institutions group (FIG) bankers active in Latin America hope that renewed GDP growth in Brazil in 2020 will lead to an increase in bond issuance from banks in the country.

So far, 2019 has been a very quiet year for FIG issuance, as low growth has combined with lower costs of financing in the local market to suppress demand.

“The local market’s development has been hard to counter,” says one leading FIG banker at the IMF/World Bank meetings. “Local markets now offer the tenor and pricing that until recently was only found in the international markets.”

Both Itaú and Bradesco have issued additonal tier-1 capital deals in the local market (local currency) in the last 12 months – transactions usually reserved for international investors.

“They have found the appetite for 10-year regulatory-driven debt deals in the local markets, and with rates where they are it is much cheaper to tap that liquidity than issue abroad and swap the dollars back into reais,” notes another FIG banker, adding that the “sales pitch” about diversifying the investor pitch by going off-shore is falling on deaf ears: “I tell the banks that they are too concentrated in Brazil and they need to maintain their offshore investors, but they reply it’s too expensive. 

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

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