Boletim de Mercado de Capitais

Fixed-income assets grab 90% of domestic funding

Domestic securities offerings in the capital market totaled R$223.7 billion in 2018, a 3.2% increase on a year-on-year basis. Fixed-income assets raised their already significant share in total offerings compared with 2017 – to 89% against 77%, driven by debentures (which raised R$140 billion last year and whose share increased from 45% to 62% of total issues in the period). Funding in the equity market accounted for only 5% of offerings compared with 18.5% in 2017, while Real Estate Investment Funds responded for 6% of domestic issuances.


Debenture sales in 2018 were marked not only by increased volume but also changes to their placement profile. The predominant share of institutional investors as subscribers to public offerings persisted, although below their slice in 2017 (from 61.1% to 51.7%), indicating that these agents are still willing to allocate funds in corporate bonds. The average placement period rose to 6.2 years from 4.7, with significant reduction in securities with an up three year-maturity (to 28.7% in 2018 from 44.6% in 2017), and a corresponding increase in  longer-term issues.


These figures mirror the growing portion of debentures issued through Law 12,431. Linked to infrastructure projects and tax-exempt for individuals, these bonds have longer maturities and liquidity in the secondary market. In 2018, debenture offerings raised R$23.6 billion, up 160% compared with the R$9.1 billion in the previous year.

As for equities, the 2018 performance (with R$11.3 billion raised including IPOs and follow-on offerings) frustrated the recovery signaled in 2017, when the amount raised reached R$40.1 billion after the weak result seen in 2016, of R$10.7 billion. There were only six primary offerings and five secondary transactions. Lower-than-expected economic growth, high corporate debt, and the typical uncertainties of an election year influenced the result.

Fundraising abroad amassed $15.3 billion in 2018, 84% of which were raised in the first half, indicating the advancement of transactions due to the electoral calendar. The $15.3 billion figure is 50% lower than the total issued in 2017 ($32.9 billion), and were raised only through fixed-income assets.