Brazil bankers, investors worry about Bolsonaro’s effect on capital markets revival

Brazil bankers, investors worry about Bolsonaro’s effect on capital markets revival

News: Brazil bankers, investors worry about Bolsonaro’s effect on capital markets revival.

SAO PAULO (Reuters) – Bankers and portfolio managers fear the recent political moves by Brazilian President Jair Bolsonaro could undermine the recent revival in the country’s capital markets.

Bolsonaro replaced the managing director of state oil company Petroleo Brasileiro and pledged to cut prices in the energy sector, two announcements that weighed on Brazilian markets on Monday. The downturn threatens a rally with companies lining up to raise capital.

The securities industry’s watchdog, CVM, analyzes requests from 33 Brazilian companies for IPOs, more than those that debuted throughout 2020.

Concerns about heightened political risk in Brazil could make pricing for the next wave of supply more difficult, said the head of equity markets at one of the country’s most active investment banks.

“It will certainly get worse, but how much will become clearer in a few days,” said the banker, asking for anonymity to speak openly about Bolsonaro’s latest testimony. A new wave of IPO prices for companies like agribusiness Agrogalaxy is expected in early March.

A portfolio manager for a Brazilian wealth management firm said the pipeline of capital markets deals could largely evaporate if Bolsonaro doubles due to looming interference in the economy. However, investors could calm down if Bolsonaro doesn’t take further unorthodox action.

Ricardo Campos, chief investment officer at Brazilian asset manager Reach Capital, said investors would be more cautious about IPOs, waiting to see if the Petrobras CEO replacement “marks a major change in policy on state-controlled companies.”

So far this year, Brazil has had 21 stock offers, including 13 initial public offerings and the rest of them follow-up offers. The grand total was $ 5.3 billion, while stock offerings were $ 28.3 billion last year, according to Refinitiv.

Reporting by Tatiana Bautzer and Paula Laier, additional reporting by Aluisio Alves; Adaptation by Brad Haynes and Aurora Ellis

Original Source © Reuters

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