Andre Portilho

USD/ZMW Update 1. Onshore FX spot rate closes around 25.250 mid vs. Offshore FX spot rate close around 27.400 mid. 2. USD illiquidity in the local FX market remains the prevailing theme and the critical driver of the recent move higher. 3. A move back to (and beyond) the ATH at around 27.230 is firmly on the cards. To continue: https://lnkd.in/dhVU3yv8

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🚀 Record Growth in Brazil’s Debt Capital Market in April! 🎋 Brazilian Debt Capital Markets sustained their secular growth in April, with total issuances reaching BRL 187 billion ($37B) in the first four months, representing a 139.1% increase compared to the same period last year. 📊 April highlights include: Interest Rates: In Brazil, there was a slight decrease in short-term maturities and a widening of long-term ones, affected by economic uncertainties and a more cautious view on government spending policies. In the US, the Fed indicated that interest rates will remain high for a longer period, which, combined with below-expected economic data, raised inflation concerns. Private Credit Markets: There was a slowdown in the offerings of #CRIs, #CRAs, and #debentures, with a 39% decrease in April compared to March, totaling BRL 33.8 billion ($7B). Factors such as problems in the agricultural sector and uncertainty regarding future Selic rate cuts contributed to this reduction and the increase in private credit spreads. Debentures, Commercial Notes (NC), and Real Estate #ABS (CRIs): Despite the slowdown compared to March, debentures and NCs continued to dominate issuances with a record BRL 115 billion ($23B) in the first four months compared to the same period in 2023. CRIs also showed strong growth, with an increase of 194%, totaling BRL 21.8 billion ($4B). Agricultural ABS (CRAs): These also performed impressively, totaling BRL 13.5 billion ($3B), an increase of 122% in the same period. 🔍 Market Radar: Impact of Spending Policies: Government reactions regarding spending policies are increasing uncertainties, which could influence the term structure of interest rates and investment decisions. Agribusiness: The first quarter was challenging for #agriculture. Requests for debt extensions, bankruptcy filings, and missed expectations made the cost of capital higher and more restrictive. Another point to watch is the impact of heavy rains in Rio Grande do Sul. Want to better understand how these trends can affect your investments or your business? Check out our attached monthly newsletter for detailed analyses and deep market insights. 💡 Exploring debt financing as an alternative to equity? Contact Raquel Silberberg Kryss, Bruno Valsecchi, Igor Donni, Felipe Moraes, Arthur O'Keefe, and discover how Bamboo Debt Capital Markets Platform, Brazil’s Premier Tech-driven DCM Dealer, can boost your company’s growth with our innovative debt solutions. Pioneering Access to Debt Capital Markets, together we can navigate the complexities of today’s market and unlock new opportunities for sustainable growth. 🎋 We look forward to exploring these opportunities with you! 🚀🎋 Article credit: Natan Oliveira Santos - Thank you! 🙏 #DebtCapitalMarkets #Debentures #Investment #BambooDCM #ABS #StructuredCredit

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It's a pleasure to share our recent article titled 'Stock splits and reverse splits in the Brazilian capital market,' which has been published in the 'Journal of Economics, Finance and Administrative Science' (IF 2.4). Special thanks to my co-authors from the University of São Paulo (USP), Mr. Daniel Werner Lima Souza de Almeida, Prof. Tabajara Pimenta Junior, and Prof. Fabiano Guasti Lima. #Finance #FinancialMarkets #StockSplits #StockMarkets https://lnkd.in/dR_KygFw

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*** BOOKS OPEN - NATIONAL AUSTRALIA BANK AUD 15NC10 SUBORDINATED MTN TRANSACTION *** Issuer: National Australia Bank Limited Issuer Rating: Moody’s: Aa2 (Stable) / S&P: AA- (Stable) / Fitch: AA- (Stable) Exp. Issue Ratings: Moody’s: A3 / S&P: A- / Fitch: A- Format: Fixed-to-Floating Rate Subordinated MTNs Programme: Australian Debt Issuance Programme - Information Memorandum dated 4th April 2023 Status: The Subordinated MTNs constitute direct and unsecured subordinated obligations of the Issuer Issue Size: AUD [$benchmark] million Pricing Date: [28] May 2024 Settlement Date: [6] June 2024 (T+[7]) Maturity: [6] June 2039 Issuer Optional Redemption: First optional redemption date of [6] June 2034 and each interest payment date thereafter excluding the maturity date, subject to prior approval of APRA. Holders should not expect that APRA approval will be given for any early redemption Guidance: SQ ASW + [210]bps ‘area’ Indic Coupon: [6.47] % S.A Indic Yield: [6.47] % S.A Re-offer Price: 100.00 Denoms: A$1,000 (min subscription amount A$500,000 for Australian investors, $200,000 for EEA) Other: Victorian (Australia) law, IWT Exempt, Not listed Settlement: Austraclear/Euroclear/Clearstream Non-Viability Trigger Event: APRA determined. Conversion applies on Non-Viability Trigger Event. Note: Please refer to Final Termsheet, the Pricing Supplement and the Australian Debt Issuance Programme Information Memorandum for detailed T&C’s and selling restrictions for the transaction Bookrunner: National Australia Bank Timing: Today’s Business, Books close 12.45pm, Expected to price SYD PM. In connection with Section 309B of the Securities and Futures Act 2001 of Singapore, as modified or amended from time to time (the “SFA”), and the Securities and Futures (Capital Markets Products Regulations) 2018 of Singapore (the “CMP Regulations 2018”), the Issuer has determined, and hereby notifies all relevant persons (as defined in section 309A(1) of the SFA) that the Subordinated MTNs are "prescribed capital markets products" (as defined in the CMP Regulations 2018) and “Excluded Investment Products” (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products). The Subordinated MTNs will not be offered or sold to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the SFA pursuant to Section 274 of the SFA) or (ii) to an accredited investor (as defined in Section 4A of the SFA) pursuant to and in accordance with the conditions specified in Section 275 of the SFA. Please contact me ASAP with bids, closes 12.45pm or earlier.

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CP+ achieved its best-ever prediction accuracy for USD IG bonds last month, as measured by the deviation of CP+ predictions versus institutional-size traded levels. The 0.89 bps median deviation from traded levels* achieved in May 2024 highlights the efficacy of the continuous improvements to the CP+ prediction algorithm and data sources. Even when accounting for market conditions by expressing prediction deviation as a percentage of bid/ask (B/A) spreads, CP+ outperformed in May with a prediction variance of 44% of market B/A spreads. CP+ is MarketAxess’ proprietary AI powered pricing engine for corporate bonds. For more: https://okt.to/WrQayk

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"Special attention for the floods in the South of Brazil. Rio Grande do Sul state has been experiencing very severe floods since the weekend. The soybean harvest is 70-75%, and down south it's close to 60%, the most affected region." A few million tons could be compromised by the extreme rains and floods in Rio Grande do Sul, some areas saw 683mm of accumulated rains in 72hs, this will most probably reduce the balance of soybeans to be exported from the State. Bullish soybeans but not so bullish soymeal as this will probably reduce the exportable surplus but not local crush. Something to monitor closely.

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Brazil Equity Strategy: “Wake Me Up When September Ends” - A Look at US & Brazil Rates Versus Equity Trends* https://lnkd.in/dcaAMS_a Key message. Fed rate cuts implied by the market suggests that June is no longer a consensus (market prices suggest it to happen in July/September meetings, or December as per our current Macro team base case), delaying the expected reallocation to equities. Brazil is up 6.8% since treasury peak (Oct 19, 2023). We analyze recent trends in US & Brazil Rates Versus Brazil Equities and reach 4 takeaways: 1) Brazil is a Highly Inverse Correlated Market with Interest Rates, 2) the Country Stands Out on Earnings Yield Gap Compared to Historical levels* (+1.0% versus -0.9%, yet far from 4% peak), at close to last decade peak in earnings yield gap versus US (3.8% versus -0.6% historical or the 4.5% 2std) and an earnings yield gap (vs. BZ real rates) of 6.6% vs. 4.6% hist. avg.; 3) Sector & Factor Investing: U.S./Global Momentum Leading the Way since October 19, 2023 U.S. Treasury peak, While LatAm/Brazil Value and Quality Suffered; 4) Our macro team recently updated scenario (see reports on Brazil and Global) suggests a balanced portfolio with value and quality:* a) higher FX of R$5.20 for 2025E bodes well for FX Hedge/Commodities with Attractive Valuation (Pulp & Paper and Oil & Gas); b) higher 2024 GDP of 2.3% based on consumer suggest domestic quality (ROEs above 15%: transportation, banks and consumer), higher Selic of 9.75% (bond proxy with double-digit IRR (utilities, malls and ports). Avoid leverage and additional material negative earnings revision trends.

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[📆 Capital Markets' #Chronicle] 6 May 2010: The Flash Crack 📉 On this day, 13 years ago, the prices of many U.S.-based equity products experienced an extraordinarily rapid decline and recovery: major equity indices in the futures and securities markets, already down from their previous day's close (on fears of a potential default by the Greek government on its sovereign debt), suddenly plunged further in a matter of minutes before recovering almost as quickly. A joint report 📖 by the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities & Exchange Commission (SEC) on this flash crash was released on 30 September 2010. 1️⃣ The report noted that volatility was high and liquidity had already fallen in the E-Mini S&P 500 futures contracts (E-Mini) and the S&P 500 SPDR exchange traded fund (SPY), the two most active equity index instruments traded in the electronic futures and equity markets. 2️⃣ A trader initiated a sell program to sell a total of 75,000 E-Mini contracts (valued at approximately $4.1 billion) as a hedge to an existing equity position.  3️⃣ It triggered further sell orders by high-frequency algorithms. The combined selling pressure drove the price of the E-Mini down about 3% in just four minutes. At the same time, cross-market arbitrageurs who bought the E-Mini, simultaneously sold equivalent amounts in the equities markets, also driving the price of SPY down approximately 3%.  4️⃣ Trading on the E-Mini was then paused for five seconds when the Chicago Mercantile Exchange (CME) circuit breaker was triggered in order to prevent a cascade of further price declines. In this short period of time, sell-side pressure in the E-Mini was partly alleviated and buy-side interest increased. As trading resumed, prices stabilized and shortly thereafter, the E-Mini began to recover, followed by the SPY. 5️⃣ However, the equity markets experienced a second liquidity crisis when automated trading systems used by many liquidity providers paused temporarily in response to the sudden price declines: based on their respective individual risk assessments, some market makers and other liquidity providers widened their quote spreads, others reduced the liquidity offered, and a significant number withdrew from the markets altogether. In the lessons learned 💡, the joint CFTC and SEC report noted that: ➡️ 6 May 2010 was an important reminder of the inter-connectedness of the derivatives and securities markets, particularly with respect to index products.  ➡️ Pausing a market with a circuit breaker can be an effective way to provide time for market participants to reassess their strategies, for algorithms to reset their parameters, and for an orderly market to be restored.  ➡️ In stressed market conditions, the automated execution of a large sell order can trigger extreme price movements, especially if the automated execution algorithm does not take prices into account. #capitalmarkets #crack #derivatives #securitiesexchange

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