Election No Longer Spooks Brazil’s M&A and Debt Markets; Deals Total R$1 Trillion
(Estadão) Unlike previous election cycles, when transaction volumes declined in the 12 months leading up to the vote, deal activity has continued and grown this year; Brazil’s country risk is at its lowest level among the past three election cycles
The risks associated with Brazil’s elections appear to have become less of a concern for investors active in mergers and acquisitions, or M&A, and debt capital markets, or DCM, according to a study by Seneca Evercore. The firm, which specializes in these areas, had observed a significant decline in transaction activity during the 12 months preceding previous elections. This year, however, that pattern has not repeated itself
“In the 2014, 2018 and 2022 elections, the market waited for the outcome before resuming transaction activity,” said Daniel Wainstein, co CEO of Seneca. “In 2026, the market priced in the election and kept doing business”
In 2018, for example, the value of M&A transactions declined by 1.8% in the 12 months leading up to the election. In 2022, amid expectations of Lula’s return to office, the decline was even sharper, at 32.7%. In 2026, the trend reversed, with transaction value increasing by 6.4%
“The electoral landscape has become very clear, and Flávio Bolsonaro is now emerging as the clear favorite,” Wainstein said
From October of last year through September, M&A and capital markets transactions reached R$1 trillion, up 20% compared with the corresponding period ahead of the 2022 election. This is the highest volume ever recorded in a pre election period, despite an environment of persistently high interest rates. “This is not a market that is avoiding the election. It is a market that is continuing to transact despite it,” Wainstein said
According to Wainstein, investors have now experienced several instances of both changes in government and incumbent reelections, and have come to understand that neither necessarily results in major disruptions to their businesses. “There used to be significant concern around changes in government, but Brazilians have seen that the world does not end regardless of which side wins,” he said. “We have had governments on both the left and the right. The outcome is never exactly what everyone wants, but the market has continued to function”
The increase in transaction activity also points to two broader trends: the market itself has grown, and investors see potential upside following the election. According to Wainstein, if Flávio Bolsonaro of the Liberal Party, or PL, is elected, there is a perception that a more forceful fiscal adjustment could be implemented, potentially leading to lower interest rates and stronger economic growth. If President Lula of the Workers’ Party, or PT, is reelected, expectations are not necessarily negative either
“Lula is a known quantity. Things are unlikely to get worse, but there is a clear perception that companies and households can no longer withstand interest rates at these levels,” he said. “If companies begin to fail and unemployment rises, the government will need to tighten its belt and address the fiscal imbalance”
Another indication that markets are less concerned about the election than in previous cycles is Brazil’s country risk. The five year Credit Default Swap, or CDS, which measures the cost of insuring against sovereign default, remained at around 130 basis points during the 12 months leading up to this election, compared with 238 basis points in the 2022 cycle and 195 basis points in 2018
This is the lowest pre election level since 2010 and is well below the levels recorded in the previous three election cycles. In recent weeks, the CDS has fallen as low as 111 basis points, its lowest level during the current presidential term, further indicating that markets are less concerned about the election than in previous years
Published on 10/05/2026 and available at:
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