Ninety One keeps Brazil lending focus as runoff stalls issuance

Ninety One is still reviewing Brazilian private lending deals while most new issuance in the country waits on the result of October's presidential runoff, Alternative Credit Investor reported.

Senator Flávio Bolsonaro of the Liberal Party took about 47% of valid votes in the Oct. 4 first round against 44.9% for President Luiz Inácio Lula da Silva, who is seeking a fourth non-consecutive term. São Paulo stocks rose as much as 8% the next day, and the real gained 1.4% against the dollar. Markets priced in hopes that a Bolsonaro win would bring more fiscal discipline, Alternative Credit Investor reported.

Allocators comparing Brazil exposure across managers can check two terms in Ninety One's book: the collateral behind each loan and the currency its borrowers earn. Matt Christ, emerging markets transition debt portfolio manager at Ninety One, said the firm lends against 'material levels of stated collateral' secured in a bankruptcy-remote fiduciary lien, and that it favours what he called natural USD earners. Whether a lien enforced outside Brazil's local restructuring process behaves as intended is the question an allocator is underwriting alongside the credit.

Brazil is 'a key focus' for the group's private lending, Christ said, with the firm still reviewing deals for both the current portfolio and the pipeline. He cited natural resources, arable land, water and a commitment to sustainability as reasons the country is a top destination for energy transition lending in emerging markets. Within that, the team targets renewables, data centres and grid infrastructure, assets whose cash flows he expects to hold up under either result.

His argument for lending into the gap is a pricing one. “Uncertainty is still priced in today, so lenders can capture a risk premium that is likely to compress once the vote is settled,” he said, describing that as an opportunity for those who can look through the noise.

Contacts on the ground are less optimistic than the first-round market reaction. “Most people we have spoken to on the ground are less optimistic and expect part of the rally to reverse whoever wins,” Christ said. “The open questions are how soon and by how much.” Fiscal credibility drives local rates, he added, and the next president will struggle to deliver it: whoever wins governs with a fragmented, right-leaning Congress where no bloc has a majority and which controls much of the budget. “Fiscal reform will be hard under either president.”

The manager's credit footprint has been moving elsewhere too: Sound Point hired a three-person team from Ninety One in October, with Chris Rust and Lei Lei as co-heads of European secured lending, as Private Wealth Daily previously reported. Christ expects the Brazil premium to compress once the vote settles. How far it compresses, and how quickly issuance follows, is what the next lender pricing a Brazilian borrower is working from.