Market funding recovers from Americanas and Light – 07/11/2023 – Market

After suffering in the first months of the year due to the episodes involving Americanas and Light, which caused a retraction in demand from investors and companies, issuances of financial instruments, such as debentures, in the capital market rehearsed a recovery at the end of the semester.

An economy that performs better than expected, and the progress of an economic agenda in Brasilia that pleases investors, have driven the resumption of issuance in recent weeks.

In June, funding by companies via fixed income and variable income operations totaled R$ 46.2 billion, the highest monthly value recorded in June, according to data released this Tuesday (11) by Anbima (Brazilian Association of Market Entities Finance and Capital).

Of the total raised, most —R$37.5 billion, or around 80%— was through fixed-income instruments, especially debentures.

Another BRL 6.5 billion (15%) came from share issues in subsequent operations (follow-on in the English term), by companies that already have shares traded on the Stock Exchange. Last month, Vamos, for car leasing, raised R$1.3 billion, while CVC, for tourism, raised R$550 million from investors.

In the first half, funding totaled R$ 153.4 billion, a drop of 35.4% compared to the same period last year.

Vice-president of Anbima, José Eduardo Laloni assesses that the month of June may have represented a turning point for the domestic capital market, with the prospect of a warmer second half.

A stronger economy than initially predicted by financial agents, added to the advancement of the economic agenda in Brasília, are pointed out by the executive among the reasons that support a more positive vision for the capital market in the second half of the year.

“As time went by during the first semester, things calmed down, and several macroeconomic measures contributed to this”, stated Laloni during a conversation with journalists.

He mentioned the approval of the Tax Reform in the Chamber of Deputies last Thursday (7), as well as the GDP (Gross Domestic Product) data for the first quarter that exceeded analysts’ expectations.

“All the reforms that modernize the economy are contributing to the improvement of the environment”, said the vice president at Anbima, adding that the capital market began to show greater vigor as future interest rates dropped.

Rates on the futures interest market, which embody the expectations of financial agents, have fallen sharply over the last few months, with a positive assessment by investors of the economic agenda conducted by the government.

The contract for January 2024, which was trading at 13.6% at the beginning of the year, was running at around 12.8% this Tuesday, on a day marked by the sharp rise in rates after the release of the IPCA (National Price Index to the Broad Consumer) of June.

Laloni also highlighted the positive performance of Fiagro, funds dedicated to investing in the agribusiness chain, the sector responsible for the growth above expectations of the economy in the first quarter of the year.

Of the main financial instruments on the capital market, the Fiagro were the only ones that recorded growth in issuances from January to June compared to the same period last year, with an increase of 50.4%, to R$ 4.7 billion.

“Even in a semester in which all other funding instruments came down [na comparação anual]the Fiagro continued to surprise with the strength of agribusiness”, said the executive.

On the other hand, debenture issues fell 41.5% in the first half, to R$ 78.1 billion, while shares dropped 28.4% in the period, to R$ 13.5 billion.

The vice-president of Anbima also stated that the prospects of an economic recovery were the main factor sustaining the share offerings carried out in the first half of the year and that new IPOs are not ruled out ahead .

The stock offerings of companies that already have shares traded on the Stock Exchange “pave the way for investment banks to be talking intensely with customers to make it feasible, as the scenario [mais positivo] if confirmed, new initial offers.”