Brazil´s debt market to proceed booming in 2025, says Itaú BBA president

By Elisa Martinuzzi and Brad Haynes

DAVOS, Switzerland (Reuters) – Brazil’s debt market will possible proceed to thrive in 2025, with a possible enhance in fairness exercise within the second half, after a three-year drought within the nation’s as soon as vibrant IPO market, Flavio Souza, president of Itaú BBA, advised Reuters on the sidelines of the World Financial Discussion board´s annual assembly in Davos.

In 2024, debt issuance reached 709.2 billion reais ($120.1 billion), 77.5% increased than in 2023 and a 55% rise from 2022, hitting a report because the Brazilian Monetary and Capital Markets Affiliation (Anbima) started monitoring in 2012.

“We had an incredible 12 months (for debt issuances), clearly as you realize associated to the rates of interest market,” Souza mentioned. “Most likely we’ll proceed to see much less exercise within the fairness market, however a really respectable degree of exercise within the debt capital market,” he added.

Souza, nonetheless, mentioned a powerful message from the federal government relating to fiscal self-discipline might enhance market sentiment and assist a gradual pick-up in fairness exercise within the second half of 2025.

In 2024, fiscal considerations and rising rates of interest saved many buyers away from the inventory market whereas diverting their consideration to the much less dangerous and more and more worthwhile debt market.

Brazil´s benchmark price ended the 12 months at 12.25%, up from 11.25% in November of 2024. The nation’s central financial institution raised the speed by a full proportion level in December, and signaled two extra price hikes of that dimension to start out the 12 months.

Regardless of considerations about Brazil’s public debt underneath leftist President Luiz Inácio Lula da Silva affecting international curiosity, the pinnacle of Itaú BBA famous that Brazil’s major deficit at this time is similar to different main rising markets.

“The principle problem we’ve is the nominal deficit, and completely associated to the rate of interest,” mentioned Souza.

Brazil´s nominal deficit is anticipated to succeed in almost 8% of GDP, the best amongst main rising economies and probably the most closely impacted by curiosity prices.

Souza mentioned he additionally expects a big variety of mergers and acquisitions in Brazil in 2025, however famous that some could take longer to finalize, as a result of excessive key charges within the nation.

“I believe that for the market as an entire, we completed the 12 months with our largest pipeline ever in M&A,” he mentioned, including that sectors akin to power and training are attracting curiosity from patrons.

Souza, nonetheless, famous that giant institutional buyers, together with sovereign funds, are consistently monitoring the nation. “And a few of them are saying that, you realize, most likely we’re seeing an entry level in Brazil that we did not see in the previous few years.”