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Renegociar é o novo normal – Podemos ajudá-lo
O atual cenário de COVID19 coloca as empresas de todos os tamanhos e geografias em situação de grandes desafios mercadológicos, operacionais e financeiros.
O primeiro grande desafio é o impacto no faturamento, que na grande maioria das empresas será negativo em grande proporção.
Operacionalmente, os maiores desafios tem sido manter a operação das empresas em tempos de isolamento social, assim como reinventar toda a logística de entrega do produto e a logística interna de trabalho para manter a produção.
Na parte financeira, os desafios são enormes tanto para as empresas, quanto para bancos, investidores, setor público, enfim, qualquer entidade que tenha compromissos financeiros.
Nesse particular, gostaríamos de compartilhar com você nossa recente experiência de sucesso e nos colocar à disposição para auxiliar sua empresa nesse momento que exige muita ação.
Acabamos concluir projeto com empresa do setor de comunicações com resultados espetaculares:
. redução anual de 31% da despesa financeira;
. ganho tributário considerável no grupo econômico;
. centralização da gestão financeira com enormes ganhos;
. revisão contábil com regularização de diversas pendências;
. identificação e preparação de negócios no grupo onde se justifica a criação de nova empresa (spin-off);
. implementação de indicadores chaves de performance (KPIs) que permitam avaliar a implementação da estratégia definida pela empresa.
Gostaríamos de fazer esse conhecimento e experiência auxiliar sua empresa a enfrentar esse momento tão desafiador. Por favor nos contacte para maiores informações.
26 / DEZEMBRO / 2018
Brazil - New Political Agenda for 2019 – What comes next?
We are closing 2018 with good numbers for Brazil, apart from the fiscal side. The BOVESPA index is up around 25%*, having returned almost 100% for the last 3 years. The SELIC rate has reached its historical low in March and has been kept at 6.5% since then without any relevant spike in inflation.
The US Dollar has appreciated circa 19% during the year, mostly during the political campaign. That is a reminder about fiscal and market risks.
On the primary market, we had a record year driven by Local Fixed Income. We closed November with a total of R$ 196 billion in new issues. Debentures and Promissory Notes totalled R$ 152 billion, or 77.5%. Structured Fixed Income (FDIC, CRA, CRI) reached R$ 20,6 billion. The disappointment came to the Equity market, with slim issuance totalling R$ 6,9 billion, 7 deals from 4 issuers.
It was an eventful year here and abroad. Mr. Trump has started his crusade against China, raising substantially import tariffs, particularly on steel. China has retaliated since then and the conversations are yet to produce any significant solution. The IMF has released a report prior to their meeting in October where they estimate the impact on long term growth of the “Trade War” in 0.9%p.y. for the US, 0.6%p.y. for China and 0.4%p.y. for the world.
Another interesting finding from the IMF report is that Asian growth now is driven by India, with 2018 growth at 7.3% versus 6.7% in 2017. On the opposite direction , China has grown 6.6% in 2018 versus 6.9% from 2017.
Europe is more concentrated on the Brexit issue and growth prospects are skewed to the downside, at 2% for 2018, versus 2.4% from 2017.
For Brazil, the most recent FOCUS report forecasts 1.3% growth for 2018 and 2.55% for 2019. The increased growth expectation is due mainly to the current economical agenda set by the new Brazilian Government. The disruptive agenda encompasses Pension Reform, Privatizations, incentives to private investment in infrastructure and Venture Capital, Tax simplification and bilateral trade agreements. The focus is on reduction of the State and its excessive role in the economy.
The question mark from the market is about execution, as Brazil and Latin America generally have been unable to fulfil market expectations for some time. India has found their formula for generating growth using a not so different agenda than the current proposed here. Hence, the picture is generally positive and we expect volatility according to the progress of that agenda.
Externally, the general picture for growth is trending to the downside, as a result of political uncertainty in many of the main markets.
We are positive on the market particularly for the first half 2019. Later than that, will depend on how the new economic agenda for Brazil evolves and of course how the external agenda will affect growth.
On the Effectu side, we will bring our new business side, Effectu Venture Capital, following on the high expectation we have for the Brazilian start-up picture. We will soon bring good news on that front.
We again would like to thank you for all your support in 2018 and wish a merry Christmas and a fantastic 2019.
- Sources: ANBIMA and Brazilian Central Bank on Brazilian markets, IMF on world markets
27 / DEZEMBRO / 2017
2017 - THE YEAR THAT ALMOST WAS
We are closing 2017 with numbers that suggest a good year. The Bovespa index up around 30%, IPOs coming back, issuance in Fixed income local and international, low inflation and the lowest ever SELIC interest rate, and still we wonder what could have happened.
In fact, it was looking great until the 18th of May, when a tape was released of a conversation between President Temer and Joesley Batista, from JBS Group, discussing what should not be discussed if you sit at the Presidential Chair.
Immediately after , our “House of Cards” almost turned into “ The Designated Survivor” . That situation reversed market expectations for reforms and a return to growth in economy. Since then, Mr. Temer has spent most of his time avoiding impeachment calls rather than concentrating in running the country.
The Pensions Reform stalled at the Congress and even a softened proposal has not been able to progress so far.
On the other hand, low inflation due the good harvest and low demand has allowed the Central Bank to cut interest rates to its lowest level ever at 7%. Foreign trade is closing with a record surplus above $ 65 billion.
Generally speaking, a good year but we wonder what could have been should the “Joesleygate” had not happened.
Nevertheless let’s come back to reality: IPOs and Follow-ons totaling R$ 31.7 billion up to November - growth of 195% compared to 2016.
On local fixed income, total market came to R$ 123.8 billion, versus R$ 114,3 from 2016. Larger growth on International Fixed Income, $ 27.1 billion versus $ 20.2 billion with some companies anticipating 2018 maturities.
For 2018, the markets anticipate a benign international picture, with higher GDP growth and slightly higher inflation. The FED apparently will continue the hiking cycle in a slow pace. Risks to that pace are the consequences of the US recent tax cuts to the US Government balance sheet. Other risks are a collapse im Brexit negotiations, low in our view, and geopolitical incidents, either in North Korea, Middle East or terror attacks in western countries. All in All, we expect the Global picture to remain positive, albeit with event volatility here and there.
In Brazil, probably higher inflation, mainly due to electricity, fuel and food, but probably within reasonable numbers.
Main risk is the presidential election come October. That needs to be followed with attention as it certainly will cause high impact on markets. Companies should in our opinion be conservative with their cash flow to avoid stress due to volatility and anticipate maturities as soon as reasonably possible.
Again, thanks for all your support in 2017, a great year for Effectu. We will continue our successful trajectory and keep you updated in 2018.
23 / NOVEMBRO /2017
BETTER MICRO TO SUSTAINABLE MACRO - EQUITY FUNDING NEEDS TO FLOW TO MEDIUM AND SMALL ENTERPRISES
We have seen a relatively benign picture in funding for large Brazilian corporates both here and abroad throughout 2017.
Also healthy anticipation of 2018 maturities abroad, issuance in local debentures, CRIs and CRAs and some Equity new issuance.
However, this funding still does not flow to medium or small companies and that in our opinion represents a risk to the macro picture, particularly growth prospects.
Of course recent interest rate cuts fostered by low inflation have helped leveraged companies renegotiate their debt in better terms and foreign trade helped the macro position but while we do not see improvement on the fiscal side of the Government we will need better funding conditions to small and medium companies to generate growth, especially some attention from Private Equity and Venture Capital.
There are at the moment good opportunities in many sectors but in most cases only an equity injection will allow that potential to be fulfilled.
Also we have been in contact with a number of very young entrepreneurs with fantastic projects and/or potential. Those people can be role models in establishing a culture of entrepreneurship among the youth in Brazil and we need that badly.
It would be a nice start to create conditions to have output compatible with better growth and avoid return to high inflation.
Historically, when we have a cycle of growth we reach output capacity very fast and that in turns brings inflation , high interest rates and the famous “chicken flight”. Let’s help correct that?
por Eduardo Nascimento
Contato: info@effectu.com.br
REDE THESIS (16/09/2017) - A Effectu Consultores Associados participou, pela segunda, vez do encontro anual da Rede Thesis em Brasília, nos dias 13 e 14 de setembro. A Rede Thesis adiciona à Effectu um rol diversificado e de qualidade de serviços que vão de georeferenciamento agrícola, passam por consórcios e soluções tributárias, no mercado imobiliário e geração em energia solar que se somam a nossas reconhecidas competências em Fusões e Aquisições, Governança , Gestão Financeira e Mercado de Capitais.
A Effectu e a rede Thesis oferecem um portfólio completo dentro dos melhores padrões tecnicos e de ética e capacidade de atendimento em todas as regiões do Brasil.
AGRIBUSINESS - STRONG HARVEST COMING (13/02/2017) - We are receiving the first inputs for the agricultural harvest and it looks a good year so far. The mood In the states of Mato Grosso, Paraná and Rio Grande do Sul is very good at the moment. The expectation is that we will have a record of over 219 million tons of grains.
Also strong productivity above 80 bags/ha in the state of Paraná. Challenge now is storage to protect the prices, particularly in Mato Grosso. Investment has been reduced in the last 2 years in the country as a whole.
Nevertheless, the countryside apparently will continue to create good news for the Brazilian economy and inflation control.
BRAZILIAN MARKET (27/01/2017) - We have seen quite good developments in the Brazilian market during the past 3 weeks: the benchmark index IBOVESPA achieved a new high above the very important level of 66,000, not seen since 2012. The missing piece came this week, with the announcement of a new follow-on for CCR, bringing back activity to the primary market. More will come soon. A healthy correction may come, probably triggered by politics. To most investors it will be welcomed as a buying opportunity
The international fixed income universe has shown steady pace and looks healthy for the time being, with good flows both in the secondary as well as the new issue market.
Last but not least, we can see finally institutional interest coming back for the local debenture market, primarily for short maturities up to 3 years. The market for Structured Products, focused mainly to individuals, is working full steam ahead and it is difficult to see this changing soon.
So why is that , even when we see floods in the South, drought in the Northeast, riots in jails, a possibility of strong allegations against the current Government team and another year of low growth coming?
The answer: small but positive measures on the spending Government? - Could be. A proposal to change the Federal pension system?- Right. But trust us, nothing like an aggressive interest rate cut, particularly coming from a conservative Central Bank. The decision of January, 11 brought year end expectations for interest rates down to 9.5% and everything in Brazil tends to get better when rates are below 10%.
Of course we need inflation expectations to remain low and more effort on the fiscal side, but that is the scenario for the moment.
WHY WE WON'T FORGET 2016 - Part 2 - In the international fixed income markets, similar to the football squad, Brazil enjoyed an impressive comeback in quarters 2Q16 and 3Q16. Taking advantage of high liquidity and scarcity of returns around the Investment Grade universe, many issuers including Suzano and Brazil Foods came back to town and placed successfully. Total volume, according to ANBIMA* reached US$ 20.2 billion for the year, versus US$ 7.6 in 2015. Still very far from the US$ 50.7 record of 2012, but undoubtedly a good recovery. We anticipate some more issuance come January 2017, but less liquidity for Emerging Markets.
In opposite direction, the local fixed income markets had a 23.4% decrease in new issuance to R$ 90.1 billion( up to Nov/16), reflecting risk aversion from local Asset Managers. Also lower issuance from infrastructure sector contributed to the lowest volume since 2010. But it is not only bad news for local fixed income, Structured products, particularly CRAs (Certificates of Agribusiness Receivables) enjoyed their best year ever growing 69.2% up to November 2016. Structured Fixed Income now represent almost 20% of the issuance in local Fixed Income.
CRAs, similar to CRIs (Certficates of Real Estate Receivables) and Infrastructure Debentures enjoy tax incentives for Individuals and Foreign Investors. Historically targeted to the former group (around 80% of the holdings), perhaps should be given more attention by the latter group, as they carry probably some of the best opportunities in the Brazilian Fixed Income universe. The most welcome news is that today this market is deep enough to produce new issues in volumes up to R$ 1.5 billion and more. We will see this number grow in 2017 and expect Foreign Investors to participate.
The fourth quarter of 2016 will probably be the one reason why most of you will not forget this year. In October, the Brazilian Central Bank came with the first interest rate cut in years (see our post on October 20th). The Monetary Policy Committee (COPOM) expects another 3% cut for the SELIC rate in 2017, as released in their statement of December 5th.
And then came Mr. Trump. His victory in the US election had an initial very negative impact to Emerging Markets, particularly Mexico, but also Brazil. In our market, it reversed the fantastic rally in the stock market. Also put on early holidays most of the dealers in Brazilian international fixed income and increased the volatility in the Forex markets. Mr. Trump´s win is in our opinion the most significant event of 2016, and not entirely priced.
Of great importance, but less impact in Emerging Markets was the Brexit vote in the UK back in June. There are fair claims that the result of the referendum had an influence on the US election and its developments will most probably play a role in the German election of 2017, not to mention implications to France and Italy.
Last but not least, the US Federal Reserve came in December with the first increase in the target rate in years. This decision was widely anticipated and surprised nobody, but the main uncertainty now is what sort of pace the FED will adopt during the Trump (it´s him again!) Government. Our expectation is that the current scenario of gradual increases will be maintained.
For 2017 we expect volatility from January, so eyes wide open from this coming Monday. Speed of Interest rate tightening in the US and softening in Brazil will need to be monitored sharply looking for opportunities. Here, we can foresee the continuation of the “silent revolution” of solar energy, some interesting IPOs and CRAs in greater volumes.
* ANBIMA - Brazilian Capital Markets Association
WHY DON'T WE WON'T FORGET 2016 - Part 1 - We had an unforgettable year in 2016. Our analysis concentrates in our Brazilian/LATAM universe, although events around the world this year will probably make somebody sitting in New York, London, Paris, Singapore, Aleppo and my dear Campina Grande agree with the first statement.
In Argentina, Mr. Macri, the new President, has brought the country back to the markets, and for Brazil this is very welcome news. Benefiting from good entrepreneurship and fantastic resources Argentina should be a fantastic destination for investment in years to come.
In Brazil, we start with the developments in the “Lava-Jato (Car Wash)” Operation, a process of “constructive destruction’ which lead to the ejection of the Head of the Lower House on September,12, the prison of 2 former state Governor´s and important CEOs from Engineering Companies, with more potential famous arrests coming. It also was the main contributor for the most important fact of the year, the impeachment of President Roussef. We understand the country will benefit from better institutions and corporate compliance as a result of Lava-Jato.
The impeachment formally was the result of a series of accounting manouvres using federal balance sheets, but there were other main contributors, particularly the involvement of high calibre authorities linked to the Government in corruption allegations from Lava-Jato, inability to obtain support from the Congress and very low popular approval rates.
For the markets, crisis became opportunity and from the ousting of Ms. Rousseff the BOVESPA benchmark index had a long yet volatile rally only interrupted by the American election, and is closing the year as one of the top performers around the world. With just 1 IPO and 8 follow-ons, the Primary market has not followed the secondary but we anticipate a couple of high profile IPOs in 2017.