Brazilian bond issues hit record high

Brazilian companies tapped the local debt market with a vengeance last year, as a means of avoiding high interest rate charged by banks.

Firms raised 140bn reais (US$37.7bn) in 2018 from the issue of bonds, known locally as debentures, the highest amount on record, according to Brazil's finance and capital markets association Anbima.

Bonds are also attractive to investors as they offer higher returns than government debt, with the Selic base rate at an all-time low.

"It is worth highlighting the growing participation of institutional investors in the debenture offerings ... This indicates that these agents, mostly investment funds, remain interested in allocating resources to corporate bonds," said Anbima VP José Eduardo Laloni.

Debenture issues linked to infrastructure projects, which offer investors tax breaks, amounted to 23.6bn last year, the highest volume since they were introduced in 2011 and up 160% compared with 2017.

Other capital market instruments contracted last year due to the high volatility generated by a tumultuous presidential election process.

Share offerings totaled 11.3bn reais in 2018 compared with 40.1bn the year before, according to Anbima.

Overseas bonds sold by Brazilian companies totaled US$15.3bn, down 50% from the previous year.