Who said fixed income isn't exciting?

Anyone who invests in private credit knows the adrenaline that runs behind the scenes in this sector. Just to give you an idea; We left a year in which debenture holders of companies like Light and Americanas suffered losses and dragged the debenture market down with them, to reach 2024 with some changes in the rules of the game, causing a real rally in this type of investment.

But after all, what is behind the rise in prices in Debentures?

We started our investigation in 2023 and we see that there were two contradictory movements: the rise in interest rates in the United States and the fall in interest rates here in Brazil. Faced with this uncertainty, many investors preferred to adopt a wait-and-watch stance. Furthermore, the Americanas effect significantly affected the private credit sector, leading the market to understand and absorb the possibility that other companies were using the " forfait ". As a result, last year was marked by a period in which investors chose to sit on the sidelines, simply observing.

Still in 2023, after the scare caused by the Americanas , we are still facing the effects of taxation and changes in rules in the tax on exclusive funds, known as super rich funds . This meant that the market, once again, needed to assimilate and incorporate new regulations . Although I am an investment specialist and not a tax professional, according to my lawyers who advise me, convertible debentures can be considered participation assets in FIP companies, therefore, being taxed only at the time of sale, if there is a capital gain . This scenario caused fluctuations in the price of these assets , as the market adjusted to new information and took advantage of opportunities created by fear and misinformation.

Furthermore, a significant change recently occurred involving a measure adopted by the National Monetary Council ( CMN ), which prohibited the issuance of several exempt fixed income securities by publicly traded companies not linked to agribusiness or the real estate sector. In other words, the supply has been reduced, while the demand for debentures was latent .

In practice, this measure created by the CMN tends to reduce the volume of issues of Agribusiness Receivables Certificates ( CRAs ) or Real Estate ( CRIs ) , as well as Agribusiness Letters of Credit ( LCAs ), Real Estate ( LCIs ) and Guaranteed Real Estate Letters ( LIGs ) in the coming months, increasing the search for other exempt products, such as incentivized debentures .

To illustrate the magnitude of the impact, the change was so striking that incentivized debentures that previously offered a premium of 0.73% in relation to the public inflation bond (NTN-B) of the same term, now offer a premium of just 0. 35% on average on NTN-B after the CMN decision together with the sector's return to interest in private credit .