FGV EAESP

We describe the evolution of the Brazilian bond market, the characteristics of issues and issuers. We find that Bond proceeds are small and have short maturity. International agencies are the main providers of rating. Fixed-yield bonds are rare. Generally, bonds are linked to the Brazilian interbank-offered interest rate (DI or CDI). Two local banks dominate the underwriting activity. These banks and their related parties receive more than half of the allocation. Less than half of issues have an investment-grade rating, and more than half are not rated at all. The incidence renegotiation of terms and default is also high. Liquidity in the secondary market is low.