Brazil private credit: Rising spreads create new opportunities in tax-exempt debentures

The Brazilian fixed-income market is experiencing a shift in private credit debentures, specifically regarding tax-exempt infrastructure bonds. Data from the intelligence platform Vitrify indicates that 90% of incentivized debentures traded between January and September this year have seen an increase in required risk premiums (spreads).

While this widening of spreads caused a devaluation in the market price of existing holdings and certain funds, it has created new entry points for long-term investors. BB Investimentos has identified six specific tax-exempt private credit titles for October that offer returns linked to the IPCA (inflation index) with maturities between 2036 and 2041.

The selected issuers include Neoenergia (Celpe), Equatorial, Engie, MRS Logística, and Vibra. Analysts suggest that despite recent market volatility and selling pressure in the secondary market, the current adjustments have resulted in a more balanced risk-return relationship for new investments.