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UPDATE 1-Brazil bankers, investors worry about Bolsonaro's effect on capital markets revival

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Tatiana Bautzer and Paula Laier
·2 min read
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(Adds quote from Reach Capital executive)

By Tatiana Bautzer and Paula Laier

SAO PAULO, Feb 22 (Reuters) - Bankers and portfolio managersworry that Brazilian President Jair Bolsonaro's latest policymoves may undermine the country's recent capital marketsrevival.

Bolsonaro moved to replace the chief executive of state oilcompany Petroleo Brasileiro and vowed to reduce prices in theenergy sector, two announcements that hammered Brazilian marketson Monday. The downturn threatens a rally that has had companieslining up to raise capital.

Securities industry watchdog CVM is analyzing 33 Braziliancompanies' requests for initial public offerings, more thanthose that made their debut during the whole of 2020.

Concern about increased political risk in Brazil could makepricing of the next wave of offerings tougher, according to theequity capital markets head at one of the country's most activeinvestment banks.

"It will surely get worse, but how much will be clearerwithin days", the banker said, asking for anonymity to speakfrankly on Bolsonaro's recent statements. A new wave of IPOpricings, for companies such as agricultural company Agrogalaxy,is expected for early March.

A portfolio manager for a Brazilian asset management firmsaid that if Bolsonaro doubles down on threats to intervene inthe economy more, the pipeline of capital markets deals maylargely evaporate. But investors may calm down if Bolsonarotakes no further unorthodox measures.

Ricardo Campos, Chief Investment Officer at Brazilian assetmanager Reach Capital said investors will be more cautious withIPOs and wait to understand whether the Petrobras CEOreplacement "means a wider change of policy regardingstate-controlled companies."

So far this year, Brazil has had 21 share offerings, ofwhich 13 were IPOs and the rest, follow-on offerings. The totalraised was $5.3 billion, whereas last year, equity offeringstotaled $28.3 billion, according to Refinitiv data.(Reporting by Tatiana Bautzer and Paula Laier, additionalreporting by Aluisio Alves; Editing by Brad Haynes and AuroraEllis)