{"id":98187,"date":"2026-04-09T21:55:19","date_gmt":"2026-04-10T00:55:19","guid":{"rendered":"https:\/\/murray.adv.br\/?p=98187"},"modified":"2026-04-09T21:55:19","modified_gmt":"2026-04-10T00:55:19","slug":"risk-premiums-rise-as-confidence-in-credit-market-weakens","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/risk-premiums-rise-as-confidence-in-credit-market-weakens\/","title":{"rendered":"Risk premiums rise as confidence in credit market weakens"},"content":{"rendered":"
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Restructurings, corporate distress and Middle East war widen spreads, while managers say opportunities are starting to emerge, caution remains essential<\/strong><\/em><\/h6>\n<\/div>\n<\/div>\n
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The repricing of risk premiums, which began in February and intensified in March, reflects uncertainty and a loss of investor confidence amid a string of cases involving troubled companies and court-supervised and out-of-court restructurings, a trend worsened by the war in the Middle East, said Alexandre Muller, a partner at JGP Asset Management, and Jean-Pierre Cote Gil of Vinland Capital.<\/p>\n<\/div>\n

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In the past, when corporate financing was far more concentrated in state-owned banks, market adjustments were not as swift. Now, with capital markets playing a much larger role in funding companies, \u201cthere is no longer any tolerance for a deviation from the path,\u201d Muller said.<\/p>\n<\/div>\n

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\u201cSpreads widened sharply because uncertainty increased as a result of these events, which undermine confidence and hurt capital markets,\u201d Muller said at an event hosted by Bradesco BBI.<\/p>\n<\/div>\n

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According to him, the sense is that the country is taking \u201csteps backward,\u201d citing uncertainty over how the legal system functions and major fraud cases in the banking sector. \u201cBut looking at the historical pattern, confidence is restored and premiums normalize.\u201d<\/p>\n<\/div>\n

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Bankruptcy framework under scrutiny<\/strong><\/p>\n<\/div>\n

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For Cote Gil, Brazil\u2019s current Bankruptcy Law encourages controlling shareholders, and \u201ccompanies are losing their embarrassment\u201d about turning to out-of-court restructuring. \u201cThe country needed a more creditor-friendly bankruptcy regime. Our average investor has limited appetite for risk,\u201d he said.<\/p>\n<\/div>\n

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He also criticized the fact that liabilities in Brazil\u2019s private-credit industry are now extremely short-term, with many funds offering same-day or next-day redemptions, forcing managers to hold high cash balances to meet withdrawals. \u201cThe industry\u2019s average term should be D+5 [meaning investors would receive their money five business days after requesting a withdrawal]. We have tried to build products with longer lockups, but I don\u2019t think that will become relevant for the sector as a whole.\u201d<\/p>\n<\/div>\n

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Cote Gil said the expectation had been for a calm first half and more volatility in the second, but that view has now reversed. He sees the widening in spreads as a technical adjustment followed by an exaggerated reaction, \u201cwhich fed on itself, and the Iran war made it worse.\u201d<\/p>\n<\/div>\n

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He added that he does not believe the adjustment is close to over, though he noted that a significant correction is already visible, especially in infrastructure debentures, which at one point traded well below Brazil\u2019s inflation-linked Treasury bonds, known as NTN-Bs. He recommended caution.<\/p>\n<\/div>\n

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\u201cThe market became complacent and just accepted it. We need to understand this move before increasing allocations.\u201d<\/p>\n<\/div>\n

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More opportunities with caution<\/strong><\/p>\n<\/div>\n

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Spreads on tax-exempt infrastructure debentures, which had reached 80 basis points below NTN-Bs in September, widened by 34 basis points in March. The median spread moved from 53 basis points below NTN-Bs to 19 basis points below. Corporate debentures without tax incentives, meanwhile, ended March at a median spread of 118 basis points above the CDI, Brazil\u2019s interbank deposit rate.<\/p>\n<\/div>\n

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Victor Tofolo, head of credit management at Bradesco Asset, said on the same panel that the repricing is affecting both tax-exempt infrastructure debentures and regular corporate debentures. \u201cWe are already starting to find more opportunities, including in high grade, but we will need to study these names carefully.\u201d<\/p>\n<\/div>\n

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He said the adjustment in infrastructure debt is bringing the risk-return ratio back to more appropriate levels and, above all, increasing dispersion. Previously, he said, spreads were clustered too closely together, which made it harder for managers to generate value.<\/p>\n<\/div>\n

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Cote Gil said his cash position was high, between 25% and 30%, so he could seize opportunities. \u201cBut it is a challenge. At the same time an opportunity appears, redemptions come in because the change in prices hurts fund performance, and part of that cash has to be used to meet withdrawals.\u201d<\/p>\n<\/div>\n

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Muller of JGP said the firm\u2019s Idex index, created to track private-credit rates and regarded as one of the market\u2019s main benchmarks, will soon release a report that already captures the recent widening in spreads. He said the index has returned to the first quartile, signaling a recovery in fund returns, including performance above the CDI.<\/p>\n

*By Liane Thedim\u00a0\u2014 Rio de Janeiro<\/p>\n

Source: Valor international<\/p>\n

https:\/\/valorinternational.globo.com\/<\/p>\n

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Restructurings, corporate distress and Middle East war widen spreads, while managers say opportunities are starting to emerge, caution remains essential       04\/09\/2026\u00a0 The repricing of risk premiums, which began in February and intensified in March, reflects uncertainty and a loss of investor confidence amid a string of cases involving troubled companies and court-supervised […]<\/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":[26859,26858],"class_list":["post-98187","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-confidence-in-credit-market-weakens","tag-risk-premiums-rise"],"yoast_head":"\nRisk premiums rise as confidence in credit market weakens - 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\/risk-premiums-rise-as-confidence-in-credit-market-weakens\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Risk premiums rise as confidence in credit market weakens - 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