Brazil election poses risks for housing subsidy programms

Even as all major candidates in Brazil’s presidential election have expressed support for housing subsidy programs, the country’s October vote still brings risks for major homebuilders, a Moody’s executive said on Tuesday.

Airline profits could also take a hit if the election results hurt the value of Brazil’s real currency, Moody’s added.

Marianna Waltz, head of the ratings agency’s Latin America corporate finance team, said in an interview that no candidate was planning structural changes to Brazil’s popular “Minha Casa, Minha Vida,” housing program, which is key for homebuilders’ bottom lines.

But she said any deterioration in public finances following the election or a decrease in consumer confidence would leave the sector significantly exposed.

«It doesn’t seem that we are going to have material changes in the current regulatory framework, which is positive. That said – if the economy isn’t doing well, if there is a reversal in market sentiment, demand isn’t going to be there», she said. «In addition to that, if government fiscal accounts are not in good shape, maybe the policy framework is there, but in practice the money will not be there to be lent».

Waltz’s comments highlight risks to some of Latin America’s largest homebuilders. Real estate executives have sought to assure investors in recent months that any housing subsidy changes will be minor, though some analysts have flagged possible cuts post-election when politicians may have fewer qualms about cutting popular programs.

Brazilian go to the polls on Oct. 7 to vote for president, governors, and state and federal lawmakers. In the presidential race, right-wing Congressman Jair Bolsonaro is likely to face off against leftist former Sao Paulo Mayor Fernando Haddad in a tight runoff.

Original story: Reuters | Gram Slattery 
Photo: Governo do Brasil (
Edition: Prime Yield