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Issuances drop 17% in April as debentures account for more than half of total

 

Brazil’s capital markets raised R$32.5 billion in April, a 17% decline from March. In the year, the volume issued amounts to R$138 billion, down 4.8% compared with the R$145 billion in the same period in 2021, mirroring a slowdown in share offerings amid rising interest rates since March 2021. Offerings in progress and under analysis reached R$6 billion and R$15.3 billion, respectively, excluding stock offerings.

Bond sales totaled R$29.8 billion in April and now amount to R$119.2 billion since January, up from the R$90.4 billion in the first four months of 2021. Debentures accounted for 56.4% of the total issued in capital markets in April, while receivables certificates (CRI, CRA and FIDC) represented 29.4%. Among these instruments, the FIDC was the only one that almost doubled its amount raised to R$3.6 billion in April from R$1.8 billion in March. CRI and CRA issuances reached R$3.7 billion and R$2.2 billion in April, respectively.

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Debentures raised R$74 billion from January to April, with most funds coming from intermediaries and other participants in the offerings, who grabbed 49.5% of the placements, followed by mutual funds, with 38.6%. Companies allocated 31% of proceeds to working capital and 29.1% to refinancing liabilities, while 12% was directed to investments in infrastructure.

The stock market still faces a slowdown for initial public offerings, with the last IPO seen last January, when fintech Nubank raised R$405.7 million. Expectations of even higher interest rates ahead pose challenges for companies eyeing their debut on the stock exchange.

Meanwhile, follow-on offerings (secondary share sales) proved to be more resilient than IPOs, with R$629 million raised in April and R$11.9 billion in the year, which represents 93.6% of the total issued in equity markets in the period.

In the international markets, only two bond issuances took place in April, totaling $663 million.