Financial services' foreign issues more than quadruple, as LFs break records

Monday, January 10, 2011

Brazil's financial services firms broke records in funding in 2010, as the volume of foreign issues more than quadrupled from 2009 and letras financeiras (LF) took off with a big boost in December, according to data and analysis from capital markets association Anbima.

Total foreign issues by Brazilian entities, including financial institutions, corporates, development banks and the government itself, reached US$40.4bn, up 54% from 2009. But the huge surge was driven by the US$14.2bn in bond and medium-term note (MTN) programs from banks and financial services, which was 335% higher than in 2009.

In total, Brazilian capital markets moved 283bn reais (US$167bn) in transactions via fixed and variable income instruments, but federal energy company Petrobras (NYSE: PBR) pushed through nearly half of this with its 120bn-real capitalization effort, Anbima said in one of three reports on Brazilian financial markets.

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A new Brazilian financial creation, the LF, saw a major jump in issues in December, as central bank BCB and the government made moves to increase capital and reserve requirements, as well as improve long-term credit conditions in the country.

The total stock of private securities rose 12.3% in 2010 from 2009, while so-called Depositos a Prazo com Garantia Especial (DPGE, or time deposits with special guarantees) grew at a rate of 36% to 19.3bn reais, Anbima said.

But it was the appearance of the LF - which reached 31bn reais in total stock by end-December after only seeing its first issues in April - that moved bank funding ahead. Anbima said that the 9.7bn-real surge in LF issues in December was due in part to the government's decision early in the month to exempt it from additional reserve requirements.

"In 2011, we hope that the [government's] measures help to make secondary markets even more active," said Anbima VP Alfredo Moraes in a statement.

To read the full report on bank funding in Portuguese, go to this link

To read the full report on the capital markets in Portuguese, go to this link

To read the full report on the investment fund market in Portuguese, go to this link