Debenture Market in Brazil Gets Hot: 167% Growth This Year

Brazilian real Brazil's debenture market grew 167% in the first half this year, compared with the same period last year, having increased from 1,757 to 4,687 operations. The figures were disclosed by the National Association of Financial Market Institutions (Andima).

The volume traded doubled using the same basis for comparison, having increased from 5.4 billion reais (US$ 2.8 billion), in the first six months of 2008, to 10.8 billion reais (US$ 5.6 billion) from January to June this year.

Debentures are bonds, traded on stock exchanges, representing medium- and long-term debt that companies use for obtaining funds.

According to the superintendent of Products and Institutional Relations of Andima, Luiz Macahyba, the expansion of the domestic debenture market is a result of three factors. "There was a significant reduction in interest rates in recent months, and that leads to a reduction in cost for the company to obtain funds. Whenever interest rates go down, companies willing to shop for funds in the capital market tend to seize the opportunity," he said.

Other contributing factors are the feeling that the worse of the international financial crisis is over, and the present situation, which is better than the near-paralysis of the capital market in the second half of 2008.

According to Macahyba, debentures are the most flexible instrument that companies have for obtaining funds in the market. The issuing of debentures enables the restructuring of liabilities, the financing of investment in production, the acquisition of another company, among other activities. "It is a type of asset that is capable of adapting to companies' cash needs," he explained.

The superintendent of Andima believes that this year should see a recovery of the debenture market in Brazil, and of the capital market as a whole. "It is possible that we have already hit bottom, and that we are now on the road to recovery." He stated that if forecasted growth of the Gross Domestic Product (GDP) of 3.5% to 4% in 2010 is correct, then stock exchanges will receive a boost.

"Economic growth is synonymous with demand for funds from companies. And the capital market plays that role in a way that few others can," he concluded.

ABr

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Close to Half Million Marijuana Plants Destroyed in Brazil

In the last four days, the Federal Police (FP) in the state of Pernambuco, ...

Industry in Brazil Wants to Grow Installed Capacity by 15%

Brazil’s industry plans to expand installed capacity by 14.6% on average this year. The ...

Brazil to Harvest 450 Million Tons of Sugar Cane for Fuel, Sugar and Cachaça

Brazil’s sugar cane crop in the 2005/2006 growing year should reach 450.2 million tons, ...

Tropical Brazil Is Finally Embracing Solar Housing

Encouraging the increasingly important practice of sustainable development and construction in Brazil the Solar ...

Brazil and Argentina Sign Agreement to Eliminate US Dollar

Argentina and Brazil signed in BrasÀ­lia a protocol for a bilateral trade payments system ...

Oil and Military in the Agenda of Brazil’s First Trade Mission to Cyprus and Israel

Brazil’s first trade mission to Cyprus and Israel departs today. The mission is headed ...

Salvador, Brazil, Made Me Do It

I am 5500 miles from home, and I’ve just met a fellow member of ...

EU and 187 Other Countries Debate in Brazil How to Prevent Biopiracy

The main challenge facing the 187 countries presently gathered in the southern Brazilian city ...

Brazil Reduces Ethanol in Gasoline in Effort to Curb Prices

In Brazil, starting this February 1st, the mandatory percentage of ethanol added to gasoline ...

Brazil’s Textile Industry Making Eyes at Russia

The Brazilian textile industry should close out the year with sales of US$ 22 ...