Brazil's biggest IPO fails in 2011.
On the eve of its stock market debut, Copersucar cites a lack of ideal market conditions, frustrating investors; tension in international markets led the company and investment banks to request a 60-day postponement of the operation; Obama still doesn't know if the US will be able to avoid default.
247_The Copersucar IPO had all the makings of being the largest capital raising by a company on the stock exchange since Santander bank, which reached R$ 13,2 billion in its debut in 2009. According to calculations by investment banks Itaú BBA, Bank of America Merrill Lynch, Credit Suisse, and Goldman Sachs, coordinators of the offering, Copersucar had the potential to reach R$ 2,7 billion. The largest sugar exporter in the Brazilian market, the company traded 5,2 million tons of sugar, or 10% of the world free trade market. But, this Wednesday the 20th, the company decided to suspend its share offering for 60 days.
Scheduled for tomorrow, Thursday the 21st, on the BM&FBovespa stock exchange, the Copersucar IPO had been stalled since last week. With the Ibovespa index down 5,3% in July, people close to the operation repeatedly said that the current scenario was ideal for failure: global stock markets are plummeting both domestically and internationally, investors are fleeing risk, and attention is focused on the delicate situations in the United States and Europe. Postponement would be better than failure. "The interruption of the public offering of common shares for a period of 60 days is due to the current unfavorable market conditions for its execution at this time," says the statement sent by the company to the Securities and Exchange Commission (CVM). All investors who reserved shares will have their orders canceled and their money returned.
The failure of Brazil's largest IPO in 2011 shows that the situation in global markets is delicate. Last week, European banks learned the results of their stress tests, which were disappointing. Eight would face serious problems in the event of a prolonged recession and were advised to raise more than €2,5 billion (R$5,5 billion). Another 16 appeared very close to the limit set by the European Central Bank and need to be alert to any crisis. With the situation regarding the Greek bailout still undefined, Italy discussing reforms to avoid economic contagion, and Spain with high unemployment, it is unclear whether these financial institutions will easily find money and weather a difficult period without setbacks.
More worrying, however, is the urgency in deciding on raising the US debt ceiling, which currently stands at US$14,3 trillion. With 13 days left until the deadline for debt payments, the discussion has drawn attention due to the political interests of Democrats and Republicans. President Barack Obama has warned lawmakers that this cannot be a bipartisan dispute and that time is running out. Obama has been making daily speeches to try to calm global markets about a possible US default. Yesterday, the president stated that a significant step had been taken by the "Gang of Six," that is, leaders of the two parties in the Senate, who proposed a reduction of US$3,7 trillion in the country's public deficit. Global stock markets reacted positively and closed higher on Tuesday. But it was only one day. And the short-term challenge is not to take risks, as Copersucar did.