Real Estate Boom Fuels Surge in Property Bonds: Brazil Credit

Sales of securities backed by Brazilian real estate assets are surging to a record as homebuilders and mall owners expand amid the fastest economic growth in two decades.

Debt offerings tied to homebuyer contracts and retail lease payments from companies including PDG Realty SA Empreendimentos e Participacoes, Brazil’s third-largest homebuilder, are on pace to reach 6 billion reais ($3.5 billion) this year, up from 3.2 billion reais in 2009, according to the Sao Paulo-based capital markets association. The bonds sold this year pay an average yield of 800 basis points, or 8 percentage points, above the IGP-M inflation index for maturities of 12 to 15 years.