Brazil Bond Proxies: Less favorable backdrop leads to a more cautious stance

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Brazil Bond Proxies: Less favorable backdrop leads to a more cautious stance

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Brazil Bond Proxies

Less favorable backdrop leads to a more

cautious stance

Industry Overview

Macro: turning more cautions as uncertainty persists 15 June 2026

LatAm continues to underperform global markets, as Fed expectations turn more Equity

hawkish, the USD strengthens, and AI-driven stories remain in focus. In Brazil, a series of Latin America

stimulus measures introduced by the government, combined with a less favorable Bond Proxies

external backdrop, led us to revise our 26YE Selic forecast upwards to 14.25% (from

13.25%) and 27YE at 13.25% (from 12.50%), see report, Brazil Watch. We turn more LatAmMerrill LynchResearch(Brazil)

cautious in Brazil and prefer less leveraged bond-proxies. (David Beker, Paula Soto) Transportation & TMT team - Equity research

Rogerio Araujo >>

Utilities: selective positioning amid macro headwinds ResearchMerrill LynchAnalyst(Brazil)

We favor names with good micro-operations, high earnings growth, and compounding +55 11 2188 4255

rogerio.araujo@bofa.com

returns. Axia Energia and Eneva stand out within our bullish view on higher power prices

team - Equity researchtheme: 1) Axia offers atrractive valuation (15% real IRR, 8y duration), trading at Utilities >> Gustavo Faria

~R$210MWh implied (vs R$260/MWh BofAe) with additional upside potential from Research Analyst

Merrill Lynch (Brazil)

higher hydro premium; 2) Eneva (14% real IRR, 8y duration) should continue to positively +55 11 2188 4295

surprise on stronger LNG gas trading, high thermal dispatch and capacity-driven growth gustavo.faria@bofa.com

(35% 3y EBITDA CAGR 2026-29e). We also highlight Equatorial for a bullish sentiment Real Estate team - Equity research

Victor Tapia >>