Brazil at a glance
Published September 11, 2024
To share
In Brazil, investors have access to a diverse range of financial products, from conventional stocks and bonds to more advanced options like ETFs, structured products, and ESG-focused investments. This variety allows investors to tailor their strategies to their individual risk tolerances.
Fixed income continues to dominate investment portfolios in Brazil, indicating a conservative investor profile. As of December 2023, approximately 44% of the total fund portfolio is allocated to bonds, while globally only 19% is allocated to fixed income products, reflecting a broader diversification of capital across various asset classes. Additionally, equities in Brazil make up a smaller portion of the portfolio compared to the global average (8% versus 46%).
However, this scenario might change as Brazil’s GDP has been growing faster than expected in 2024, potentially boosting corporate issuance and rekindling risk appetite.
Investment outlook
The Brazilian capital market numbers for 2024 confirm that the segment has evolved from a promising business environment into a strategic hub that extensively aligns investor fund allocation with corporate financing across various sectors. Up until August, emissions of fundraising instruments totaled R$ 484.2 billion, representing an increase of 4% compared to the entire year of 2023.
This mobilization of resources is not limited to the increased volume of issues but is also explained by the greater diversity of fundraising instruments, reflecting the entry of new issuers and leading to a new profile of investors, which makes the secondary market more dynamic and fragmented.
Debenture emissions have accounted for the largest share of the volume, representing 59% of the total raised this year. Smaller companies have found
commercial notes, introduced to the market in 2021, to be a significant financing tool, with total emissions already exceeding R$102 billion since its launch and representing 6.0% of the total issued this year
Simultaneously, the maturation of securitization and structuring instruments has expanded investment opportunities in economically significant segments. The real estate sector, with CRIs (Real Estate Receivables Certificates) and real estate funds, and agribusiness, with CRAs (Agribusiness Receivables Certificates) and Fiagros (Investment Funds in Agro-industrial Production Chains), are prime examples. These two sectors alone have raised R$ 103.2 billion through capital market instruments, accounting for 21.3% of the total issued this year.
The increase in bond offerings in recent years has strengthened the secondary market, both through the greater number of available assets and the entry of new investors. Notably, incentivized debentures, long-term securities linked to investment projects with income-tax exemptions for individuals, have played a significant role in democratizing access to capital markets and leading to a more fragmented segment. The growing liquidity in this market has been crucial for signaling exit opportunities for investors interested in selling their securities, especially during stressful periods.
Currently, tax-exempt debentures account for 37.7% (up to July/2024) of transactions, which has been vital for increasing liquidity not only for these securities but for the entire corporate credit market — the total volumes traded of debentures (corporate and tax-exempt ones) have grown at an average annual rate of 23% since 2021. The increased variety of assets, with different characteristics and maturities, has maintained the attractiveness of capital market transactions, now more dispersed and fragmented.
At the same time, the rise in emissions and transactions with incentivized debentures has facilitated funding for infrastructure sector companies, especially for those related to electricity, sanitation, transport and oil and gas.
However, this trend is not limited to infrastructure companies. The growing role of Brazil’s capital markets in the financial obligations of non-financial companies is reflected in the increase in corporate debt securities, which rose from 18% in 2016 to 32.7% in 2023 (excluding debentures held by financial institutions), aligning with levels observed in more mature economies.
The challenge remains for the Brazilian capital markets to continue its growth in the coming years (between 2017 and 2024, the average annual growth rate of emissions was 13%), but the outlook is optimistic. Expectations are for domestic interest rates to decrease starting next year once inflation expectations are
anchored, potentially lowering the opportunity cost of issuing fixed income instruments and contributing to a resurgence of equity emissions and IPOs.
Click here for more information on ANBIMA (all information provided in the link is in Portuguese and with numbers shown in BRL).
Brazil at a glance
Published September 11, 2024
To share
In Brazil, investors have access to a diverse range of financial products, from conventional stocks and bonds to more advanced options like ETFs, structured products, and ESG-focused investments. This variety allows investors to tailor their strategies to their individual risk tolerances.
Fixed income continues to dominate investment portfolios in Brazil, indicating a conservative investor profile. As of December 2023, approximately 44% of the total fund portfolio is allocated to bonds, while globally only 19% is allocated to fixed income products, reflecting a broader diversification of capital across various asset classes. Additionally, equities in Brazil make up a smaller portion of the portfolio compared to the global average (8% versus 46%).
However, this scenario might change as Brazil’s GDP has been growing faster than expected in 2024, potentially boosting corporate issuance and rekindling risk appetite.
Investment outlook
The Brazilian capital market numbers for 2024 confirm that the segment has evolved from a promising business environment into a strategic hub that extensively aligns investor fund allocation with corporate financing across various sectors. Up until August, emissions of fundraising instruments totaled R$ 484.2 billion, representing an increase of 4% compared to the entire year of 2023.
This mobilization of resources is not limited to the increased volume of issues but is also explained by the greater diversity of fundraising instruments, reflecting the entry of new issuers and leading to a new profile of investors, which makes the secondary market more dynamic and fragmented.
Debenture emissions have accounted for the largest share of the volume, representing 59% of the total raised this year. Smaller companies have found
commercial notes, introduced to the market in 2021, to be a significant financing tool, with total emissions already exceeding R$102 billion since its launch and representing 6.0% of the total issued this year
Simultaneously, the maturation of securitization and structuring instruments has expanded investment opportunities in economically significant segments. The real estate sector, with CRIs (Real Estate Receivables Certificates) and real estate funds, and agribusiness, with CRAs (Agribusiness Receivables Certificates) and Fiagros (Investment Funds in Agro-industrial Production Chains), are prime examples. These two sectors alone have raised R$ 103.2 billion through capital market instruments, accounting for 21.3% of the total issued this year.
The increase in bond offerings in recent years has strengthened the secondary market, both through the greater number of available assets and the entry of new investors. Notably, incentivized debentures, long-term securities linked to investment projects with income-tax exemptions for individuals, have played a significant role in democratizing access to capital markets and leading to a more fragmented segment. The growing liquidity in this market has been crucial for signaling exit opportunities for investors interested in selling their securities, especially during stressful periods.
Currently, tax-exempt debentures account for 37.7% (up to July/2024) of transactions, which has been vital for increasing liquidity not only for these securities but for the entire corporate credit market — the total volumes traded of debentures (corporate and tax-exempt ones) have grown at an average annual rate of 23% since 2021. The increased variety of assets, with different characteristics and maturities, has maintained the attractiveness of capital market transactions, now more dispersed and fragmented.
At the same time, the rise in emissions and transactions with incentivized debentures has facilitated funding for infrastructure sector companies, especially for those related to electricity, sanitation, transport and oil and gas.
However, this trend is not limited to infrastructure companies. The growing role of Brazil’s capital markets in the financial obligations of non-financial companies is reflected in the increase in corporate debt securities, which rose from 18% in 2016 to 32.7% in 2023 (excluding debentures held by financial institutions), aligning with levels observed in more mature economies.
The challenge remains for the Brazilian capital markets to continue its growth in the coming years (between 2017 and 2024, the average annual growth rate of emissions was 13%), but the outlook is optimistic. Expectations are for domestic interest rates to decrease starting next year once inflation expectations are
anchored, potentially lowering the opportunity cost of issuing fixed income instruments and contributing to a resurgence of equity emissions and IPOs.
Click here for more information on ANBIMA (all information provided in the link is in Portuguese and with numbers shown in BRL).
Brazil at a glance
Published September 11, 2024
To share
In Brazil, investors have access to a diverse range of financial products, from conventional stocks and bonds to more advanced options like ETFs, structured products, and ESG-focused investments. This variety allows investors to tailor their strategies to their individual risk tolerances.
Fixed income continues to dominate investment portfolios in Brazil, indicating a conservative investor profile. As of December 2023, approximately 44% of the total fund portfolio is allocated to bonds, while globally only 19% is allocated to fixed income products, reflecting a broader diversification of capital across various asset classes. Additionally, equities in Brazil make up a smaller portion of the portfolio compared to the global average (8% versus 46%).
However, this scenario might change as Brazil’s GDP has been growing faster than expected in 2024, potentially boosting corporate issuance and rekindling risk appetite.
Investment outlook
The Brazilian capital market numbers for 2024 confirm that the segment has evolved from a promising business environment into a strategic hub that extensively aligns investor fund allocation with corporate financing across various sectors. Up until August, emissions of fundraising instruments totaled R$ 484.2 billion, representing an increase of 4% compared to the entire year of 2023.
This mobilization of resources is not limited to the increased volume of issues but is also explained by the greater diversity of fundraising instruments, reflecting the entry of new issuers and leading to a new profile of investors, which makes the secondary market more dynamic and fragmented.
Debenture emissions have accounted for the largest share of the volume, representing 59% of the total raised this year. Smaller companies have found
commercial notes, introduced to the market in 2021, to be a significant financing tool, with total emissions already exceeding R$102 billion since its launch and representing 6.0% of the total issued this year
Simultaneously, the maturation of securitization and structuring instruments has expanded investment opportunities in economically significant segments. The real estate sector, with CRIs (Real Estate Receivables Certificates) and real estate funds, and agribusiness, with CRAs (Agribusiness Receivables Certificates) and Fiagros (Investment Funds in Agro-industrial Production Chains), are prime examples. These two sectors alone have raised R$ 103.2 billion through capital market instruments, accounting for 21.3% of the total issued this year.
The increase in bond offerings in recent years has strengthened the secondary market, both through the greater number of available assets and the entry of new investors. Notably, incentivized debentures, long-term securities linked to investment projects with income-tax exemptions for individuals, have played a significant role in democratizing access to capital markets and leading to a more fragmented segment. The growing liquidity in this market has been crucial for signaling exit opportunities for investors interested in selling their securities, especially during stressful periods.
Currently, tax-exempt debentures account for 37.7% (up to July/2024) of transactions, which has been vital for increasing liquidity not only for these securities but for the entire corporate credit market — the total volumes traded of debentures (corporate and tax-exempt ones) have grown at an average annual rate of 23% since 2021. The increased variety of assets, with different characteristics and maturities, has maintained the attractiveness of capital market transactions, now more dispersed and fragmented.
At the same time, the rise in emissions and transactions with incentivized debentures has facilitated funding for infrastructure sector companies, especially for those related to electricity, sanitation, transport and oil and gas.
However, this trend is not limited to infrastructure companies. The growing role of Brazil’s capital markets in the financial obligations of non-financial companies is reflected in the increase in corporate debt securities, which rose from 18% in 2016 to 32.7% in 2023 (excluding debentures held by financial institutions), aligning with levels observed in more mature economies.
The challenge remains for the Brazilian capital markets to continue its growth in the coming years (between 2017 and 2024, the average annual growth rate of emissions was 13%), but the outlook is optimistic. Expectations are for domestic interest rates to decrease starting next year once inflation expectations are
anchored, potentially lowering the opportunity cost of issuing fixed income instruments and contributing to a resurgence of equity emissions and IPOs.
Click here for more information on ANBIMA (all information provided in the link is in Portuguese and with numbers shown in BRL).
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