Bank of America expects recovery of business in Brazil after a 60% retraction

By Cristiane Lucchesi

Bank of America, ranked No. 1 in Brazil in investment banking revenue, expects the business to recover after tumbling 60% so far this year.

“Despite the market being down, we remain optimistic looking ahead, mainly because there is the possibility of an interest rate cut in Brazil in the second half of this year that would probably stimulate business,” Bruno Saraiva, Bank of America’s (BofA) co-chief investment banker for Brazil, told Bloomberg News in an interview.

Revenue from mergers and acquisitions advisory and lead equity and bond issuance transactions fell to US$162 million in Brazil this year through May 10, down from US$405 million in the same period last year, according to research firm Dealogic.

BofA had the highest revenue in the period relative to the total, with a 14.8% market share, up from 12.8% in the same period last year.

“We continue to feel the impact of the covid pandemic, global monetary tightening, and a sharp decline in investment banking fees, not only in Brazil but worldwide,” Saraiva said.

The last quarter of 2023 may be the strongest, he said.

BofA was one of the advisors to Natura & Co on selling its luxury cosmetics brand, Aesop, to L’Oréal, a deal approved by Cade last Wednesday (17).

Capital markets transactions led by BofA included an additional R$1 billion stock sale by health care company Hapvida.

The bank also led block trades of R$180 million in shares in M Dias Branco, a cookie and pasta maker, and R$428 million in GPS, which provides outsourced cleaning, maintenance, and security services.

The bank was also among the leaders in a US$750 million global sustainability bond issued by Banco do Brasil and a US$2.25 billion global bond issued by the federal government.

Total sales of shares of Brazilian companies fell nearly 50%.

This year to R$8.7 billion, according to data compiled by Bloomberg.

“We expect capital market activity to return, with M&A discussions becoming more frequent,” said Hans Lin, co-head of investment banking in Brazil at BofA, also in an interview with Bloomberg News.

“After sovereign and quasi-sovereign bonds reopened the market and with global interest rates stabilizing somewhat, we are seeing growing interest among issuers for global bond offerings, with a more challenging local bond market due to higher rates, low volume, and shorter maturities,” Lin said.

With information from Bloomberg

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