Outlook for the Brazilian Economy and Local Credit Markets

FOR SROLLING BAR__1__square black whiteThe economic drivers that have brought Brazil to its knees are now pointing to a more favorable climate, even though economists continue to lower their GDP forecasts. The market is now looking for GDP to fall 1.7% in 2016. The forecast for 2016 sounds bad until compared to 2015’s forecast of a decline in GDP of -3.1%. Even the most negative economists are calling for zero growth in 2017.  Similarly, our indicators are showing more favorable conditions for Brazil’s economy and eventual economic recovery.

All the bad economic news bodes ill for year-to-date performance of Brazilian credit, right? Given the severity of the Brazilian economic decline, many US credit investors assume that Brazilian asset-backed securities must be suffering the same plight as the US and European asset-backs did during that 2008/2009 crisis.  However, that is not the case. Brazilian credit, has performed reasonably well as measured by returns on leveraged subordinate ABS tranches.  Access the full report using this link:Brazil Credit 2015 and Forward Final

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