{"id":92525,"date":"2025-01-15T15:14:18","date_gmt":"2025-01-15T18:14:18","guid":{"rendered":"https:\/\/murray.adv.br\/?p=92525"},"modified":"2025-01-15T15:14:20","modified_gmt":"2025-01-15T18:14:20","slug":"fixed-income-rescues-investment-banks-in-brazil","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/fixed-income-rescues-investment-banks-in-brazil\/","title":{"rendered":"Fixed income rescues investment banks in Brazil"},"content":{"rendered":"\n
Record debt issuance offsets a sluggish year for equity offerings and subdued M&A activity in 2024<\/em><\/strong><\/h6>\n\n\n\n

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01\/15\/2025<\/p>\n\n\n\n

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The robust growth in Brazil\u2019s fixed-income market, particularly domestic debt issuances, provided much-needed relief to investment banks operating in the country. The segment accounted for nearly half of their total fees in 2024, marking a record year for corporate debt issuance as investors shifted toward fixed income amid high interest rates.<\/p>\n\n\n\n

In contrast, revenue from equity-related activities plummeted again, hitting one of the lowest levels on record. This reflects a prolonged dry spell for equity offerings by Brazilian companies.<\/p>\n\n\n\n

Data from consulting firm Dealogic, compiled for Valor, shows that revenue from core investment banking activities\u2014including mergers and acquisitions, equity, fixed income, and syndicated loans\u2014totaled R$4.4 billion in 2024, a 5% decline from an already weak 2023.<\/p>\n\n\n\n

Fixed-income deals were the saving grace for investment banks in 2024, generating R$2.1 billion in revenue, the highest level ever for the segment. This marked a 60% increase from 2023, according to Dealogic. The surge was driven by a record R$608.1 billion in local corporate debt issuances between January and December, a 76% increase, according to newly released data from B3. International bond issuances also recovered, further boosting revenues.<\/p>\n\n\n\n

Meanwhile, the equity market painted a starkly different picture. The IPO window for new companies on Brazil\u2019s stock exchange has been closed for over three years, with no signs of reopening in 2025. Factors such as the new cycle of monetary tightening and market volatility weigh heavily. Domestically, investor risk aversion has increased following the government\u2019s fiscal package, seen as insufficient. On the international front, uncertainty has grown due to Donald Trump\u2019s return to the U.S. presidency, which has heightened expectations for a slower pace of interest rate cuts by the Federal Reserve.<\/p>\n\n\n\n

Revenue from equity offerings, including block trades, totaled R$311.1 million in 2024, a 60% decline from R$829.6 million in 2023. This figure also represents just 7% of the R$4.5 billion generated in 2021, the last boom year for Brazil\u2019s capital markets.<\/p>\n\n\n\n

The largest equity offering of 2024\u2014a secondary transaction tied to the privatization of water utility Sabesp\u2014had little impact on bank revenues. Despite its size, the low fees associated with the deal meant minimal earnings for the financial institutions involved.<\/p>\n\n\n\n

For 2025, investment bankers expect fixed-income issuance volumes to remain strong but less dynamic. With many companies having already accessed the market in 2024, the pipeline for new deals is not expected to be as robust.<\/p>\n\n\n\n

Headwinds<\/strong><\/p>\n\n\n\n

In the M&A space, activity in 2024 showed signs of recovery but remained below historical averages. High interest rates and macroeconomic uncertainties could dampen enthusiasm for new transactions. However, deals involving energy and infrastructure assets stood out as exceptions, driving activity in these sectors.<\/p>\n\n\n\n

Revenue from M&A deals totaled $296 million in 2024, a 25% drop compared to 2023. Many announced transactions have yet to be completed\u2014several are still awaiting approval from Brazil\u2019s antitrust regulator, CADE\u2014delaying the recognition of associated revenues.<\/p>\n\n\n\n

Large-scale M&A transactions involving foreign buyers and mergers between Brazilian companies seeking synergies and scale helped offset the weak equity market, said Roderick Greenlees, head of Ita\u00fa BBA\u2019s global investment banking division.<\/p>\n\n\n\n

Mr. Greenlees said Ita\u00fa closed 2024 with a strong pipeline, especially in energy, infrastructure, sanitation, retail, and consumer sectors. The bank has also expanded into sports and entertainment, industries gaining traction in global investment banking.<\/p>\n\n\n\n

Bruno Amaral, head of M&A at BTG Pactual, described 2024\u2019s transaction volume as \u201chealthy given the circumstances,\u201d with traditional sectors like energy and infrastructure driving activity. \u201cOur pipeline for the year is stronger,\u201d Mr. Amaral noted, though he cautioned that the current environment has extended the deal cycle to 18\u201324 months.<\/p>\n\n\n\n

Fabio Nazari, head of equity at BTG Pactual, expressed optimism that a rally in the Ibovespa stock index to 140,000\u2013145,000 points could unlock some follow-on equity offerings, boosting bank revenues.<\/p>\n\n\n\n

Bruno Saraiva, co-head of Bank of America\u2019s investment banking operations in Brazil, highlighted the resilience of the bank\u2019s fixed-income and M&A businesses amid a challenging 2024. He noted that derivatives trading, not included in Dealogic\u2019s data, also played a role in sustaining activity for the U.S. bank\u2019s Brazilian unit.<\/p>\n\n\n\n

\u201cThere is a lot of dialogue and activity in the M&A space this year,\u201d Mr. Saraiva said. However, market volatility, including exchange rate fluctuations, could affect the timing of deal closures. In the equity market, Mr. Saraiva sees potential for follow-on offerings and block trades but little visibility for IPOs. Given current conditions, he anticipates another challenging year ahead.<\/p>\n\n\n\n

*By\u00a0Fernanda Guimar\u00e3es \u00a0\u2014 S\u00e3o Paulo<\/p>\n\n\n\n

Source: Valor International<\/p>\n\n\n\n

\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

Record debt issuance offsets a sluggish year for equity offerings and subdued M&A activity in 2024 01\/15\/2025 The robust growth in Brazil\u2019s fixed-income market, particularly domestic debt issuances, provided much-needed relief to investment banks operating in the country. The segment accounted for nearly half of their total fees in 2024, marking a record year for […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[25779,25780],"class_list":["post-92525","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-fixed-income-rescues-investment-banks-in-brazil","tag-sluggish-year-for-equity"],"yoast_head":"\nFixed income rescues investment banks in Brazil - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/fixed-income-rescues-investment-banks-in-brazil\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fixed income rescues investment banks in Brazil - Murray Advogados\" \/>\n<meta property=\"og:description\" content=\"Record debt issuance offsets a sluggish year for equity offerings and subdued M&A activity in 2024 01\/15\/2025 The robust growth in Brazil\u2019s fixed-income market, particularly domestic debt issuances, provided much-needed relief to investment banks operating in the country. 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