Brazil had its greatest yr ever for fairness gross sales, and (BA)C US Fairness”/>Bank of America Corp. made probably the most of it.
The Wall Street lender is that this yr’s high fairness underwriter within the nation, dealing with 20.6 billion reais ($four billion) and leapfrogging Banco Itau B(BA) and JPMorgan Chase & Co., which took the 2 high spots in 2019, knowledge compiled by Bloomberg present.
“Back in March when the pandemic hit Brazil, we were very concerned and thought 2020 would be a lost year,” Hans Lin, Bank of America’s co-head of funding banking for Brazil, stated in an interview. “But it all came back full-force starting in July, and the pipeline for 2021 is very busy.”
Latin America’s greatest nation was hit laborious by the Covid-19 outbreak, with 6.7 million confirmed circumstances and the second-highest demise toll on the earth. To assist revive the financial system, coverage makers slashed the benchmark fee to an all-time low, prompting buyers to dump their fixed-income bonds in favor of equities. Firms, personal fairness corporations and even the Brazilian authorities took benefit of buyers’ newfound urge for food for stocks to boost cash.
A complete of 154.three billion reais in fairness gross sales hit the market in 2020, a 47% surge that surpassed the earlier report of 153.6 billion reais in 2010, knowledge compiled by Bloomberg present. Complete charges for fairness underwriting in Brazil elevated nearly 18% in greenback phrases, to $496 million, in response to London-based analysis agency Dealogic.
Bank of America, based mostly in Charlotte, North Carolina, was the lead underwriter on the largest Latin American preliminary public providing this yr, hospital operator Rede D’Or Sao Luiz SA’s $2.2 billion transaction. It additionally dealt with the largest block commerce in Brazil’s historical past, a $1.6 billion sale of Vale SA shares.
The nation’s improvement bank is answerable for a lot of the fairness deluge. BNDES bought a 22 billion-real stake it held in frequent shares of Petroleo Brasileiro SA initially of the yr, one of many greatest fairness transactions in Brazil’s historical past. It additionally unloaded an nearly 11 billion-real stake in mining firm Vale by means of two block trades, one in August and one in November.
Regardless of the fairness bonanza, charges for the investment-banking trade, together with merger-and-acquisition advising and debt underwriting, are prone to finish the yr nearly 14% beneath 2019 in greenback phrases, in response to Dealogic. A mix of decrease M&A quantity and a roughly 20% plunge within the Brazilian actual are in charge, he stated.
Additionally serving to drive up enterprise in 2021 will probably be inflows from offshore buyers shopping for Brazilian stocks. Foreigners pumped $6.four billion into the nation’s fairness markets in November, in response to native exchange knowledge, the very best month-to-month determine since at the least 2008.
“In the last quarter, we’ve seen an increase in global investments in Brazil, especially in the larger equity transactions,” Lin stated.