DEALTALK-Brazil share offerings fall back to earth in gloomy year

viernes 14 de febrero de 2014 11:05 GYT

By Guillermo Parra-Bernal

SAO PAULO Feb 14 (Reuters) - Stock offerings in Brazil are off to their worst start this year in a more than a decade, the latest sign of a severe erosion of investor confidence in Latin America's largest economy.

No initial public offering or follow-on sale has been filed with Brazil's securities regulator CVM so far this year, something unheard of since at least 2004, according to Thomson Reuters data. Prospects are so gloomy that many deals suspended last year due to souring market conditions are unlikely to materialize in coming months, bankers and investors said.

A truncated capital markets calendar, rising political risks and the emergence of attractive investments elsewhere mean investment bankers, who have thrived for years with easy-to-sell IPOs in Brazil, are now struggling to push through deals.

Banks may even be forced to structure some offerings with extra guarantees to lure buyers, according to investors such as Fator Administradora de Recursos' Fabio Moser.

"Unfortunately Brazil has not been a source of good news recently, and it won't be for a while," said Fabio Nazari, head of equity capital markets at Grupo BTG Pactual SA. "There are lingering doubts about the economy and potential for some earnings downside that are leaving investors skittish."

After a benign 2013 in which the listing of insurer BB Seguridade Participações SA was the world's biggest IPO, companies are now braced for tight windows of opportunity to market their deals. A presidential election in October, reduced global liquidity and growing price scrutiny from potential buyers will add to pressure, said Fernando Iunes, global head of investment banking at Itaú BBA.

"We are going from a period of abundant capital and risk-taking to, let's say, the other extreme," Iunes said in an interview. "Investors will remain very selective and companies' fundamentals will be critical to access a much tighter market."   Continuación...