Itaú BBA - Issuances abroad already higher than in 2015

FX and Capital Markets

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Issuances abroad already higher than in 2015

June 13, 2016

Overseas bond issuances total $11.1 billion year-to-date ($9.6 billion from corporations)

(full report attached)

Global environment favors emerging market currencies

The global scenario remains favorable for emerging markets, as expectations of higher interest rates in the U.S. have been pushed forward and growth in China seems to have stabilized. Hence, capital flows returned to emerging markets, boosting their currencies. During the week, the Brazilian real appreciated 2.9% to 3.42 per U.S. dollar, outperforming its peers (Charts 1, 2, 3 and 4).

Central bank reduces interventions in the FX market 

The monetary authority did not offer reverse FX swap contracts last week. Currently, its short position in FX swaps stands at $62 billion (Charts 5 and 6).

Currency outflows at the beginning of June 

Financial flows remained negative in early June, as in recent months. During the first week of the month, $959 million financial outflows outsized $22 million trade inflows (Charts 7 and 8).

New bond issuances overseas last week

Two Brazilian companies issued debt overseas last week. A sugar and ethanol company raised $500 million, while a paper and pulp enterprise raised $350 million. Overseas bond issuances total $11.1 billion year-to-date ($9.6 billion from corporations), beating the $8 billion recorded in 2015 (Chart 9 and table).

Foreign flows to the stock market are negative in June

Foreign flows to the stock market are negative in June, as $379 million outflows from the futures market outsized $312 million inflows to the spot market (Chart 10).

Investors changed their positions in dollar futures 

Non-residents and institutional investors reduced their positions in dollar futures by $251 million and $970 million, respectively.  Non-residents, banks and institutional investors hold positions of $23 billion, $39 billion and $14 billion, respectively (Charts 11, 12, 13 and 14).


 

 



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