(Recasts to add comments, outlook for rest of the year in paragraphs 1-6)
By Guillermo Parra-Bernal
SAO PAULO, July 8 (Reuters) - First-half sales of debt and equity offerings in Brazil this year slumped to their lowest since 2010, but a slew of initial public offerings in state companies should boost the year-end total, industry group Anbima said on Wednesday.
While rising borrowing costs, a steep downturn and mounting political turmoil kept potential buyers on the sidelines during the first six months, investors could return to domestic capital markets with a number of state IPOs, said Carolina Lacerda, a director in Anbima’s investment-banking division.
So far, reinsurer IRB Brasil RE SA and the insurance unit of state-controlled Caixa Econômica Federal have picked a group of investment banks to help manage their offerings, sources told Reuters in recent weeks.
Flagging placements of debentures, promissory notes and other fixed-income securities in the domestic markets may recover partly due to efforts by state development bank BNDES to stimulate the purchase of those investments, she added.
Anbima, a group that represents investment banks and asset managers in the country, hopes capital markets activity will revive after a very weak start to the year. Dozens of deals stalled this year because of mounting economic and political turmoil.
While advisory work has remained rather intense in the period, she said, banks are finding it harder than usual to finalize transactions.
Domestic offerings of shares and debt excluding leasing notes totaled 53.45 billion reais ($4.7 billion) in the January-to-June period, down from 81.12 billion reais a year earlier, Anbima said in a report.
In global markets, bond offerings by Brazilian companies plunged about 82 percent to $7.58 billion. The number is the lowest since at least 2009, Anbima noted.
“I’d say that at the end of the year, the total amount of combined offerings should be around the levels we saw last year,” she said. Last year, companies sold a combined 81.1 billion reais worth of bonds and stocks in local markets.
Investors expect interest rates to end the year at a nine-year high, as the central bank seeks to head off annual inflation that is running at twice the official target. Fallout from a corruption scandal involving key ruling coalition members is fanning concern about the government’s ability to cut spending and attenuate the impact of a likely recession.
$1 = 3.2163 Brazilian reais Reporting by Guillermo Parra-Bernal Editing by W Simon and David Gregorio