December 6, 2023
Jakorsky credit is preferred.  "Nobody can compete with the 14% silica rate"

Jakorsky credit is preferred. “Nobody can compete with the 14% silica rate”

Andrei Jakorsky, co-founder of JGP, is bullish on the debt market and sees a period of strength ahead for the Principal Credit District.

“It is clear today that I have a personal preference for debt Stock🇧🇷 “Nobody can compete with 14% interest,” Jakorski said today during JGP’s second credit day in São Paulo.

For him, in the coming weeks, as negotiations over the transitional presidential election commission conclude and the team for the new government is determined, it will be possible to get an idea of ​​the intensity of the moves that have already taken place.

It has already been explained that the Lula government’s plan will focus on social issues. The result, Jakorski said, would be a higher interest rate than it would be under a more conservative government. “Perhaps ‘interest-free’ financial assets will not have such a promising performance.”

For Jakorski, the new government will have to understand that the conditions that existed in Lula’s first government and in recent years of Bolsonaro’s government will no longer exist.

“The real interest rate used to be very negative, and now it’s very positive, so you won’t have the advantage of spending a lot without seeing the debt go up,” said Jakorski. “Even if you don’t spend a lot, the debt will go up, because when Lula took office in 2003 we had a primary surplus of 3.5% of GDP, credit expansion, and the formalization of the economy that created more revenue for the government. Debt dynamics today totally different “.

to the founder of the ancient charter, If PT does not understand these differences, the situation “is going to get complicated.” “It is not that there is evil in the financial market, it is a fact.”

Local market

This year, the capital market is establishing itself as the main source of corporate financing: from January to September, the balance of credit in the hands of investors amounted to R$706 billion, an amount greater than R$700 billion of bank credit. .

The largest market share follows the reduction of credit subsidies by the Treasury Department, which fell from R$52.4 billion in 2014 to R$1.4 billion in 2022.

Alexander Müller, partner and head of credit at JGP, said that despite economic policy uncertainties, it is unlikely that there will be a material expansion of Treasury subsidies to compete with the financial market, given fiscal constraints.

“It’s a huge inefficiency in allocation and opens room for misconduct,” said Alexandre, who believes the government’s priorities will be Auxílio Brasil, readjusting the minimum wage and expanding the Bolsa Família.

JGP expects fixed income issuances (bonds, promissory notes, money bills, CRAs and CRIs) to exceed R$160 billion this year, surpassing the record of R$154 billion in 2021. In the cumulative period through October, these issuances were at R $135 billion.

This will happen even as global monetary policy tightens. Alexander said the market is growing thanks to fixed-to-fixed income demand, platform development and performance.

In the first nine months of 2022, the return on the Idex-CDI Index, the JGP index that tracks private post-fixed credit, was 10.7%, outperforming the CDI (8.9%) and Ibovespa (5%).

The average monthly differential measured by Idex-CDI has been relatively stable at 1.8% for two years; It stabilized at this level after the pressures of the beginning of the pandemic, reaching 4.8%.

The JGP index also shows that market growth is accompanied by more fragmentation – the share of issues with ratings equal to or below A in the index rose from 12% in 2020 to 22% in 2021 and is 24% this year through October.

There are more low-rated names on the market. “The challenge with paper selection today is greater and it is important that we are more careful because there are greater risks in the industry,” Alexander said.

He remembers that this year there were many negative credit events, such as 5 rating downgrades at Tenda and Le Biscuit; breach of VirtusPay’s financial obligations; Problems in Captalys and Negative Bond Performance.

“There has been no shortage of fear of credit, and that will probably be the keyword from now on. We will probably have a credit event every two months, also due to the growth of the market for structured products,” Alexander said. From the ramifications, that story of all the trusts doing more or less the same, I think it will come to an end.”


In the foreign debt market, the year was “very difficult”, said Nicolau Mueller, JGP partner in charge of external credit analysis, and the performance was driven by macro factors.

“The geopolitical stakes have increased, with the conflict between Russia and Ukraine, polarized elections in Latin America and the growing risk of a global recession,” Nicolau said. “All of this has had negative effects on global fixed income.”

The CEMBI Latam Index is down 15.7% in the year through October and is heading for its worst year in the historical series that began in 2002. In these 20 years, the index has had four negative performances: the worst were in 2008 (down 10.5%) and 2015 (up 10.5%). decrease by 8.8%).

CEMBI Brazil lost 12.5% ​​in the year through October.

Nicolau said that this decline in the value of the currency is explained by the opening of about 300 basis points in the 5-year Treasury bonds, which had a negative impact of 13.36%. and the opening of 70 basis points of credit swaps, with Brazil risk increasing, which accounted for -3.24%. Two other components offset these macro factors: yield and credit spread, which was positive at 4%.

The JGP survey also showed the openness in Brazilian bond yields over the year: at the end of 2021, it was around 5% and is now closer to 9%. Once again, the effect of Treasuries and credit swaps (CDS) was responsible for the opening, with credit spreads around 2% near the lowest levels of the last 10 years.

The year is also set to be the worst since 2014 in terms of resource outflows from startup bonds, in the series calculated by JGP: As of October, withdrawals amounted to US$28.5 billion, or 12% of assets under management in these funds.

“There have been resource outflows almost every week of the year, which affects bond trading, as funds have to sell assets and the market loses liquidity,” said Nicolau.

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Anna Paula Ragazzi