Wednesday, 28 January 2009

LatinFinance Says Lack of Financing is Putting Brazilian Homebuilders in a Bind. Time for Further Consolidation in the Sector?

A kind reader of this blog forwarded us a note by New York-based magazine LatinFinance published this morning. The magazine says in its daily brief that the ''lack of financing´´ is putting ''Brazil’s homebuilders in a bind,´´ citing a Fitch report that we summarised on Jan. 22 (click right here for the link to the posting.) The intersting part of the LF report is that ''private equity bankers say they are beginning to see investment opportunities in the sector.´´

Consolidation might be the natural path for many of these companies, said a U.S.-based anonymous source to LF, as ''debt payment and lack of financing will produce investment opportunities.´´ A São Paulo-based banker told the newsletter that ''he has had some conversations with companies in the sector,´´ some of which will undergo some restructuring or even might need to bring in a private equity partner.

While the situation of some companies like Brascan looks not too bad at the moment, others are facing serious cash problems. Company, Trisul, Cyrela (the market's leader,) Even and Gafisa were subject of credit ratings changes by Fitch in recent days. In the previous days, real estate companies have driven down the Bovespa on concern over their business model, expensive acquisition charges and a decline in the creditworthiness of mortgagors. The BNDES and Caixa Economica Federal (both state-owned lenders, of course) are ready to step in to help ailing homebuilders cope with the stressful markets. It seems that the Brazilian state is ready to become a war hospital ... at the expense of taxpayers.

1 comment:

  1. Memo .. mil gracias por esto. Por favor comenta mas sobre el sector de papel y pulpa en Brasil. ¿Estan mal?

    Luis A.