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July 30, 2022
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Seven of 34 companies lead the fixed income market on the Caracas Stock Exchange

Seven of 34 companies lead the fixed income market on the Caracas Stock Exchange

The Caracas Stock Exchange grew 18% in nominal terms in the first half of 2022, however, its operations in bolivars devalued almost 25% against the dollar. A total of 40 series placed in the fixed income market were instruments indexed in currencies. Ramiro Molina, president of the National Chamber of Securities Market Intermediaries, considers that this modest growth in the BVC is the product of an effort to show the benefits of this market as a source of financing


The fixed income market continued to boost operations on the Caracas Stock Exchange (BVC) in the first half of 2022. However, the capitalization of the capital’s market continued to be impacted by devaluation and inflation. While the placement of instruments indexed to the dollar continued to become a good option for financing individuals and companies.

Market operators highlight that there was significant growth in the capital’s circle in relative terms, especially in fixed income operations, but in absolute terms that result continues to be modest compared to the needs and size of the economy.

BVC Figures indicate that in the fixed income market, 204 series were registered for placement for an amount equivalent to 16.9 million dollars, lor which meant an increase of 402% compared to June 2021 when instruments for $4.2 million were placed.

Of the 204 series, 40 of them were currency-indexed instruments worth $5.1 million. A total of 34 issuing companies participated during the semester. In 2019, the market had only three debt-issuing companies

Of the 34 issuers, seven take 66% of the total placements. They are FM Foods, ($1.8 million), Calox International ($2 million), Coca Cola Femsa de Venezuela ($1.5 million), Gimiscar ($1.5 million), Grupo Apradoc ($1 million), Mercantil Servicios Financieros ($1.4 million) and Silmaca ($1.6 million).

For their part, four companies issued in dollars on the BVC during the period, for an amount close to two million dollars: Agroinlaca ($1 million), Ron Santa Teresa ($300,000), Vepica ($200,000) and Marzoca ($400,000).

Ramiro Molina, president of the National Chamber of Securities Market Intermediaries, considers that this modest growth in the BVC is the product of an effort to show the benefits of this market as a source of financing.

“There is no queue of companies seeking financing, but the stock market is competing with other sources of credit that go beyond the conventional or traditional one,” he said.

Molina stressed that the stock market is not yet the first option for seeking financing because it has a series of formal processes that must be followed and that take time and costs. However, “the job that intermediaries have is to take the tools we have to corporate treasuries so that they issue their financial assets on the Stock Exchange. It is slow work and We have advanced a lot in this new rationality in which the Venezuelan economy finds itself.”

Although most of the operations in the Caracas Stock Exchange continue to be in bolivars, the issuance of variable income (shares) and fixed income (commercial papers, unsecured bonds, etc.) have increased in the last two years. For Molina, this possibility “is one more tool on the investor’s table, who ultimately decides which option suits him best.”

stock rise

Regarding the variable income market, data from the Caracas Stock Exchange indicates that 11,857 operations were carried out with a volume of 1,498,903,806 shares for 61.3 million bolívares, an amount equivalent to 12.9 million dollars.

When comparing these figures with the same period of 2021, it is observed an increase of 64.43% in the total number of shares traded, as well as a variation of 16.9% in the effective amount negotiated of $11 million in 2021.

In this market, the companies that led operations in the period by number of operations are the shares of the Stock Exchange, Ron Santa Teresa, Banco Provincial and Fondo de Valores Inmobiliarios.

In this period, the negotiations of the share package between Banco Occidental de Discount and Banco Nacional de Credito stand out, which are in the process of buying and selling BOD assets.

In general terms, the market capitalization suffered a contraction of $12o million closing June of this year at $1,765 million versus $1,886 million in June 2021.

This market is in expectation, after the announcement of several State companies that decided to place between 5% and 10% of their shares on the Stock Exchange, among them, the Bank of Venezuela and the telephone company Cantv. This means that Venezuelans will be able to become shareholders of public companies. Oil joint ventures are also expected to participate in these operations, according to government announcements.

In general, the Caracas Stock Exchange grew 18% in nominal terms between January and June 2022. However, its operations in bolivars were devalued against the dollar by almost 25%, which meant a contraction in real terms.

Ramiro Molina, who is also director of Fivenca Casa de Bolsa, foresees that, by the end of this year, a figure of $40 million dollars in emissions can be reached, which would mean a significant rise after three or four years with placements of $3 million. “I wish it were 400 million dollars, but I think that at some point these amounts will accelerate, because we already see a level of satisfaction in the companies that have approached to issue debt in the fixed income market because they found a place where they can cover their needs”.

In relation to the number of intermediaries or brokerage houses that have emerged in recent years in the Venezuelan stock market, he highlighted that there are new instruments that have been created for several specific sectors such as agriculture and for entrepreneurship. “Everyone has to find their niche and activity. Many think that there are many people for such a small bed, but if the actors bring new ideas, more clients and have the ability to grow the market, then we all win.

For this year, the National Securities Superintendence (Sunaval) is also expected to authorize the BVC’s multi-currency project, in which different payment currencies are accepted, including crypto assets.

Also read: Gustavo Pulido: With sanctions attracting foreign investment in the stock market will be very difficult


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