Corporate debt market show signs of recovery
After a dearth of issues between February and April, the corporate debt market began to show signs of recovery. Spreads, which had risen sharply in the first four months of the year, are no longer increasing, and corporate issuance is back on the radar. According to the Brazilian Financial and Capital Markets Association (Anbima), the number of requests for financing in the primary market increased this month. "We are already seeing a recovery," said Guilherme Maranhão, president of the association’s capital markets structuring forum.Anbima registers four new operations for the issuance of agribusiness receivables certificates (CRAs) and debentures bonds for a total of nearly R$3 billion. One is the R$1 billion issue of Equatorial Energia’s Celg, with a prospectus already published. It does not seem much compared to the volume of debentures previously raised in the Brazilian market, but Luis Gustavo Pereira, director of Guide Investimentos, puts it in perspective: "It’s remarkable because we were not seeing issues from big companies. Now the activity is back."Mr. Pereira cited similar moves, by Cemig and Iguá Saneamento, which are in the roadshow phase. "It seems that we are reaching the turning point, both in tax-exempt debentures, which have income tax exemption, and corporate bonds. We are starting to see companies coming back to the table and planning refinancings and investments. A higher quality pipeline," Mr. Maranhão said. The initial recovery is driven mainly by the perspective of beginning of interest rate cuts and by the presentation of the Lula administration’s new fiscal plan.Last year was abundant, with R$270 billion raised through debentures (an increase of 8% compared to 2021) and a monthly volume of R$35 billion (in December). Among banks, free credit to businesses reached R$1.4 trillion, up 9.9%, according to data from the Central Bank. In January, the turnaround happened after the discovery of an accounting hole in Americanas, which preceded a set of bad news, including court-supervised reorganizations (BRK Financeira, phone carrier Oi, and power utility Light) and companies in financial distress (fashion retailers Marisa and Renner, furniture retailer Tok&Stok, brewery Grupo Petrópolis, and travel company CVC).The impact was heavy. Between January and April, the volume of debentures issued (R$43 billion) was 41% lower than the same period in 2022 (R$73.3 billion) and 52% lower than the immediately preceding four months...
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