Brazil’s economy may be heading towards investment grade but its capital markets have not decoupled from the US and European markets and are feeling the backwash from the subprime crisis.
The initial public offerings (IPO) market – one of the hottest in the world last year – has been moribund this year as foreign investors, who were accounting for 75% of the demand for new issues, have retreated. The same is true of the Eurobond market and a Petrobras deal was pulled earlier this year in response to the bad conditions.