Brazil's strong economic growth, low interest rates and deepening capital markets will benefit B3 SA - Brasil Bolsa Balcão, which is now the leading financial market infrastructure company in Latin America, according to Moody's.
"B3 will benefit from higher equity and related derivatives trading volumes, as companies issue more equity in 2019 and flows into equity and multimarket focused asset managers continue to rise," Moody's said in a report. The rating agency expects "demand for and supply of corporate debt to remain high" given a longer period of low interest rates and the economic recovery that boosts corporate activity in return.
About 30 new companies are expected to list in B3 this year, Folha De S.Paulo reported. The stock exchange recorded an average daily trading volume of 12.2 billion reais last year.
According to Moody's, B3 has significant operating leverage due to its diversified business model, which came as a result of the 2017 merger between BM&FBovespa SA and Cetip SA. The bourse benefited from the 2018 election, when trading volumes rose to record highs.
"We expect B3 to continue posting very strong results and cash flow generation, reducing financial leverage ratios even further," Moody's said.
Meanwhile, Moody's expects B3 to continue having an advantage over its competitors, despite a condition in the merger that allows potential rivals to use its infrastructure and levels out trading prices for players. The stock exchange's risk management framework for its clearing business also remains a credit strength, as it has "proven to be resilient through volatile economic periods."
As of Jan. 8, US$1 was equivalent to 3.72 Brazilian reais.