At the World Economic Forum's annual meeting in Davos, Flavio Souza, president of Itaú BBA, expressed optimism about Brazil's debt market for 2025 and predicted a potential uptick in equity activity in the second half of the year following a lull in IPOs. In 2024, debt issuance in Brazil reached a record 709.2 billion reais ($120.1 billion), marking significant growth compared to previous years.
Regarding market trends, Souza highlighted the impact of interest rates on debt issuances, anticipating a sustained level of activity in the debt capital market. He stressed that governmental commitment to fiscal discipline could bolster market sentiment and lead to increased equity activity later in 2025.
Throughout 2024, fiscal uncertainties and higher interest rates diverted investor focus from equities towards the more secure and lucrative debt market. Despite challenges posed by Brazil's nominal deficit—largely due to escalating interest costs—Souza pointed out that the country's primary deficit is in line with other major emerging markets.
Looking ahead to 2025, Souza anticipated a notable rise in mergers and acquisitions, particularly in sectors like energy and education. While acknowledging the cautious approach of institutional investors, he noted growing interest in Brazil, signaling a potential entry point not seen in recent years.