Brazilian Investment Bonds Sales Up

  • 14 years ago
  • Uncategorized
The Brazilian economy is going from strength to strength with real estate investments at the heart of the South American regions economic growth. Brazil is now witnessing the fastest economic growth in decades and as a result sales of securities are rocketing.
Securities backed by Brazilian real estate assets are surging construction companies and shopping mall owners expand.
Debt offerings tied to homebuyer contracts and retail lease payments from companies including PDG Realty SA Empreendimentos e Participacoes, Brazil’s third-largest homebuilder, are on pace to reach 6 billion reais ($3.5 billion) this year, up from 3.2 billion reais in 2009, according to the Sao Paulo-based capital markets association. The bonds sold this year pay an average yield of 800 basis points, or 8 percentage points, above the IGP-M inflation index for maturities of 12 to 15 years.
“Demand for these bonds is strong,” said Rodrigo Machado, head of real estate finance products at the association. “Mortgage and credit for development are far from cooling and the stake sold to investors is still very small.”
Growth that analysts forecast will top 7 percent for the first time since 1986 in Latin America’s biggest economy is fueling demand for higher-yielding assets along with near record low interest rates. At 800 basis points above inflation, the yield on the real estate-backed bonds is about 186 above that on seven-year government bonds linked to the consumer price index.
Brazil’s economy was built on, and continues to develop, commodity-based products including oil, iron ore, gold and numerous agribusiness crops. These industries have done well in the past decade while being able to support the growth of the service and manufacturing sectors which now employ more people than the former. Economist have predicted that the Brazilian economy will continue to grow and develop into one of the top five in the world.
Over the last few years the Brazilian economy has grown steadily per gross domestic product (GDP) measurements.

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