Upcoming presidential elections and sovereign uncertainties clouding Brazil are doing very little to hinder the country's structured finance arena. In fact, much to the surprise of many market participants, deals are quickly lining up and begging to close before elections in October.
Over the past year, market sources have told ASR that Brazil's market would hit a lull prior to the presidential elections, as many issuers would tend to wait for more sovereign and economic certainty. Furthermore, in light of the elections, earlier this month, Standard & Poor's lowered Brazil's foreign and local currency ratings to single-B plus and double-B, respectively, and maintained a negative outlook. Following the sovereign downgrade, S&P also lowered its ratings on various structured finance transactions and financial institutions. The rating agency said the sovereign downgrade reflects rising public debt, which further reduces the country's fiscal flexibility. Additionally, S&P said tighter fiscal management will be necessary to maintain the current levels of debt to GDP, given the worsening domestic debt profile and heightened market concerns over political uncertainties.