Market Roundup: Corporate financing via capital market breaks record

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Capital market share in corporate financing hit 42 percent in 2023

The share of resources from capital market operations and instruments in the consolidated debt of Brazilian companies reached 42.4 percent in 2023, double the level of a decade ago and also the highest ever recorded by the Center for Capital Market Studies (Cemec) of the think tank Fundação Instituto de Pesquisas Econômicas (Fipe).

State of play. According to Cemec’s new study, this occurred in a year of record defaults and bankruptcy filings in the country, a situation driven by the effects of the Central Bank’s restrictive monetary policy over the past two years.

Why it matters. The recent rise of the capital market as a reliable source of financing for businesses is a sign of a larger and more mature business environment, as well as better regulatory and governance standards.

“This is natural for countries as their financial systems develop. However, Brazil is still far from the level of developed markets, such as the United States, where the share of capital market participation in corporate financing is four or five times greater than that of bank loans,” Carlos Antonio Rocca, economist and coordinator of Cemec-Fipe, tells The Brazilian Report.

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Fabiane Ziolla Menezes

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.