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Credit Suisse Brazil CEO Says Deal Window to Remain Wide Open

Credit Suisse Brazil CEO Says Deal Window to Remain Wide Open

(Bloomberg) -- Credit Suisse Group AG says the rally that has been driving Brazilian stocks to all-time highs is nowhere near over -- and that the window to raise capital and push through deals will remain wide open despite elections later this year.

"The combination of the positive view of Brazil with the global environment is what is behind this rally -- and I don’t expect it will stop," Jose Olympio Pereira, the bank’s chief executive officer in Brazil, said in an interview on the sidelines of Credit Suisse’s annual Latin America conference in Sao Paulo.

The country’s benchmark stock index has broken record after record, breaching the 84,000 mark after a decade stuck in the 70,000 range. The advance gained momentum over the past week after the graft conviction of Former President Luiz Inacio Lula da Silva was upheld, diminishing his chances of making a comeback to run for the nation’s top job in October elections. Investors fear Lula would undo much of the reformist agenda being implemented by the current government to fix Brazil’s fiscal problems.

The Ibovespa, as the stock gauge is known, is up 15 percent year-to-date in dollar terms, compared to a 5 percent rise on the S&P 500 index.

Credit Suisse Brazil CEO Says Deal Window to Remain Wide Open

While the presidential race remains unclear, with candidates seen as market-friendly failing to gain ground in the polls, Olympio says that there’s a view the next president will carry on with the reform agenda. President Michel Temer’s flagship pension reform bill, which is expected to be voted in Congress next month, "is not a factor in market prices right now," he said.

The continued rally should help prop up Credit Suisse’s revenues in Brazil, as 2018 promises to be "a favorable year for capital raising in spite of the elections" with investment banking activity poised to surpass last year’s, Olympio said. Credit Suisse was the second largest equities underwriter in Latin America last year, up from seventh in 2016, according to data compiled by Bloomberg. The bank was also involved in PagSeguro Digital LTD’s $2.3 billion initial public offering in New York, the biggest from a Brazilian company since 2013.

"There’s a big pipeline of companies that will access the market. To me, given how favorable conditions are right now, people will try to hit the market as soon as possible, and that’s what we’re recommending the clients," he said. "However, I don’t see this as a narrow window."

To contact the reporters on this story: Felipe Marques in Sao Paulo at fmarques10@bloomberg.net, Daniel Cancel in Sao Paulo at dcancel@bloomberg.net.

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Julia Leite

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