[SAO PAULO] Bonds in Brazilian state-controlled oil producer Petróleo Brasileiro SA and those of banks, steelmakers and commercial property companies are expected to benefit from President Dilma Rousseff's removal, which could usher in more business-friendly policies, Deutsche Bank Securities said in a report.
Brazil's Senate voted last week to impeach Rousseff and she faces trial on charges of breaking budgetary rules. Vice President Michel Temer, who is replacing her, could implement measures appealing to business and investors, Deutsche Bank analyst Eduardo Vieira wrote in a report distributed late on Sunday.
Ms Rousseff's interventionist policies, which for years choked off investment, could be followed by a more market-friendly framework that would help reignite confidence, stabilise the currency, pave the way for lower interest rates, revalue local assets and stoke a recovery in activity, wages and demand, Mr Vieira said. "Execution risks on the new administration are not small, but the bar is lower," Mr Vieira wrote.
Petrobras, which for years was Rousseff's favorite tool for policies that fueled inflation and dragged Brazil into a recession, could benefit most from the change, the report said. Steelmaker Cia Siderúrgica Nacional SA, airline Gol Linhas Aéreas Inteligentes and mall operator BR Malls SA could also gain.
Average yield spreads on a sample of Brazilian corporate debt that Deutsche Bank covers are about 1.5 percentage point wider than a year ago relative to comparable government notes.
A faster-than-expected economic recovery could limit rising loan defaults, helping reverse record loan-loss provisions for the nation's domestic lenders, Vieira wrote. Easing political pressure on state banks to rekindle growth could also help them plan a "rational" expansion of their loan books, he said.
Petrobras has about US$33 billion in outstanding bonds, with the steelmaker known as CSN having another US$2.95 billion. Both state and private-sector banks have almost US$38 billion worth of global bonds outstanding - a number including subordinated debt, the report added.