<iframesrc=" ns.html?id="GTM-MZDVZ6&quot;" height="0" width="0" style="display:none;visibility:hidden"> Debenture funding has best first quarter since 2012 – ANBIMA

Boletim de Mercado de Capitais

Debenture funding has best first quarter since 2012

 

Brazil’s capital markets raised R$39 billion in March, down 19.2% from the previous month but funding totaled R$105.2 billion in the first quarter, surpassing the R$102.8 billion for the first three months of 2021 – then an all-time high for a first quarter. Offerings in progress and under review totaled R$7.1 billion and R$12.6 billion, respectively, which exclude stock sales.

Among funding instruments, debenture overperformed compared with other assets both in March and in the year, raising R$24.6 billion and R$55.9 billion, respectively. Two indicators mirror debenture’s good performance, with the biggest funding for a first quarter since 2012 and the amount raised from January through March, which was almost double the R$30.9 billion seen in the first three months of 2021.Debenture issuances.png

Companies allocated more than half of proceeds raised through debenture to working capital (34.2%) and to refinance liabilities (24.2%). Intermediaries and other participants linked to offerings reduced their share as subscribers to such corporate bonds to 51.6% from 62.9% compared to the first quarter of 2021. Meanwhile, mutual funds’ appetite for debenture has increased from January through March, grabbing 36.6% of the total from 24.7% a year ago; institutional investors came next, with 8.1%.

Commercial notes also proved to be an alternative to funding, with almost R$10 billion raised from January to March. With less red tape for this type of issuances under Law 14,195/21, 25 companies raised funds through the instrument in the period.

There was only one follow-on offering (secondary share offering) issued by Allied Tecnologia, which raised R$6 million. Currently there is no share offering being planned under the CVM Instruction 400, which regulates transactions aimed at overall investors, while six offerings still not placed are under review, of which two are on hold - one IPO in the manufacturing industry and another follow-on offering in the banking sector.

There were no issuances overseas in March. Rising Treasury yields amid expectations of rate hikes by the Federal Reserve tend to raise funding costs for companies, discouraging them to access international markets.