<iframesrc=" ns.html?id="GTM-MZDVZ6&quot;" height="0" width="0" style="display:none;visibility:hidden"> Domestic market raises R$ 370 billion in 2020 – ANBIMA

Boletim de Mercado de Capitais

Domestic market raises R$ 370 billion in 2020

Local issuances in capital markets totaled R$ 369.8 billion in 2020, down 14.5% from 2019. Despite the drop, reflecting an atypical year marked by investor uncertainty regarding the economy and given high asset volatility, capital markets showed a more sustained recovery from the middle of the year. In the first three months of the pandemic, the monthly average of issuances reached R$ 21.6 billion against R$ 34.5 billion between June and December. And the monthly result for December (R$ 63.7 billion) was the highest since October 2010 - when there was a R$ 120.2 billion secondary offering of Petrobras shares - indicating a positive outlook for 2021. Ongoing offerings and under analysis total R$ 8.5 billion, except for share offerings under review.

As in 2019, fixed-income assets saw their share decline in the total issued in 2020, to 55.8% from 69.6% amid low interest rates in recent years and the drop in the Selic rate above pre-pandemic estimates. In contrast, the share of stock offerings (IPOs and follow-ons) increased to 32.3% from 20.8% in relation to 2019, while real estate investment funds increased their relative slice to 11.9% from 9.6% in the period.Share of Instruments.png

In the stock market, the highlight was the increase in initial public offerings, which went from R$ 10.2 billion to R$ 45.3 billion, the highest since the IPO boom in 2007, a 342.3% gain in the period. In December 2020 alone, IPOS raised R$ 15.3 billion. In number of transactions, growth was also significant to 27 from 5. Secondary share offerings (follow-ons) dropped 7.3% to R$ 74 billion. The number of transactions fell 32.4% to 25 from 37. Mutual funds bought the largest volume of shares in public offerings with virtually the same participation from 2019 (43%), followed by foreign investors with 34.1%.Subscribers.png

Debenture offerings dropped 33.9% last year, the first decline since 2015, to R$ 122.1 billion from R$ 184.7 billion. Of this total, 67.8% of the amount was allocated to working capital, refinancing liabilities and redemption of debentures previously issued. Among subscribers, there was a significant increase in the relative share of intermediaries and other participants linked to offerings, which went from 40.6% to 64.5% while mutual funds, which held the largest share of issuances in 2019, with 48.8%, accounted for only 23.4% of the total offered. December saw the largest monthly amount issued in the year at R$ 28.6 billion.

The debentures maturity profile in 2020 shows that bonds due up to three years accounted for 34.5% of issuances against 19.5% in the previous year. Debentures maturing between four and six years dropped to 30.7% of the total last year from 45.2% in 2019.

As for tax-exempted debentures for retail investors issued under article 2 of Law 12,431, targeted at infrastructure projects, there was a 45.6% decrease to R$ 18.4 billion from R$ 33.8 billion in 2019, which reflects a decline in primary market transactions to 42 from 75.

The real estate market’s recovery started in 2019, still buoyant in 2020 due to a 2% Selic rate, sustained its growth trajectory with issuances from estate investment funds, rising to R$ 44.1 billion in 2020 from R$ 41.4 billion in the previous year. Retail investors are still the top subscribers to public offerings of real estate funds, with 41.9% of the total placed, followed by mutual funds, with 28.1%.

In the international market, estimates point to the same trend from the previous year, with a predominance of debt sales (around 95%) and complemented by share offerings. The number of transactions last year matched the total in 2019 (32), with the amount rising to $27.3 billion from $25.7 billion in the previous year. Two sovereign issuances of Brazilian bonds ($3.5 and $2.5 billion) and one from Petrobras ($3.25 billion) were the largest offerings last year abroad.