Japan's SMBC to expand in Brazil's local bond capital markets

Japan Times

08-04-2025

Sumitomo Mitsui Banking is starting a bond distribution desk and a securitization business in Brazil as part of an expansion plan to become a meaningful player in the nation's booming local debt capital markets.
The Japanese bank plans to start structuring products such as asset-backed securities, hoping to capitalize on the growing market and strong prospects for infrastructure investments in Brazil, according to Luciana Massaad, head of Brazil debt capital markets, who said Adriana Madaras was hired to head the distribution unit.
"Now we are baby stepping and doing plain-vanilla bonds,' Massaad said in an interview. "But the more products we develop, the more opportunities we can take.'
SMBC, which is expanding throughout Latin America, started the local bond underwriting business in Brazil last year and has completed four transactions. In September, the Tokyo-based company hired Joaquim Marques, who now heads Brazil corporate and investment banking, and Juan Francisco Toro, chief executive officer for the non-bank financial business in Mexico. Sumitomo also has representative offices in Chile, Colombia and Peru.
Local infrastructure bond volume in Brazil more than doubled in February to a record for the month of 12.8 billion reais ($2.3 billion). The total of 25.9 billion reais for the year surpassed the first quarter of 2024, according to Anbima, the nation's capital-markets association.
Total local bond sales almost doubled to a record 502.8 billion reais last year.
"We always had pretty much Japanese CEOs in the Americas, and we still have them because they are a huge support to us,' said Carl Adams, the deputy head of the Americas division who's responsible for Latin America. "But over the last few years, we also are hiring local CEOs that are partnering together with Japanese expats to figure out how we can maximize value business by business.'
The idea is to hire more executives to serve the region, including specialists in mergers and acquisitions, with a view to "leveraging our expertise in our energy infrastructure project-finance side to create a multi-product platform,' Adams said.
The bank is also building a global asset-management operation, and has joint ventures and a local fund in Colombia. It's building one in Mexico, also with a local fund, while discussing building specific individual funds with partners interested in Brazil.
"We see huge growth potential in the local currency space across the region,' Adams said.
Deals Pipeline
The bank is very active in derivatives and international debt capital markets, and has a pipeline of deals on the acquisition finance side, according to Marques.
SMBC Nikko Securities America, the lender's broking, trading and investment-banking unit, was among the joint lead managers of a $1 billion bond sale by Raizen, a Brazilian bioenergy company, issued in February.
With 2.1 billion reais in shareholder equity and total assets of 12.5 billion reais in its Brazilian bank unit, SMBC has $10 billion in total exposure to Brazil, according to Achilles Suarez, chief executive officer of the bank's Brazilian unit.
The bank has about 350 Japanese clients, 75 Brazilian corporates and multinationals and about 30 banks, and the goal is to expand its customer base in Brazil by adding 30 to 40 new clients a year.
"We are going to grow the number of multinationals, private equity funds, pension funds, sovereign-wealth funds, sophisticated family offices — those are a key priority for us,' Marques said.
Jefferies Financial Group, which opened its first office in Brazil in 2023, is also collaborating with the Brazilian unit of Sumitomo in offering credit and credit-related products to its local clients as part of its global relationship with the bank, it said in July.