In a context of ample domestic liquidity in 2024, few Brazilian companies sought funding in international debt markets. One notable exception, however, was Ambipar, a Brazilian environmental management multinational, which bucked the trend when it opted last January to issue its first ever international bond.
It proved a sage choice. Markets reacted favorably to the deal, allowing the company to raise $750 million in 7-year senior unsecured notes, up from its initial target of $500 million.
“The transaction exceeded our expectations, reflecting the strong interest from global investors for our company’s business profile and for the sustainable character of our project,” says João Arruda, the CFO of Ambipar, which wins the award for Debut Issuer of the Year.
The marketing effort included a five-day roadshow, which allowed the company to engage with over 115 global investors, including EM and ESG accounts. The bond, which paid a coupon of 9.875% – a spread compression of 12.5 basis points – ended up 3.6 times oversubscribed. It was the first Brazilian note to reach the $750 million threshold since 2021, according to Morgan Stanley.
The bond acquired a green label, with proceeds earmarked for investments that generate a positive ESG impact, such as recycling and the recovery of natural areas.
“The ESG label emerged naturally, as the company’s activity is focused on the provision of environmental services linked to the circular economy, decarbonisation and environmental recovery,” Arruda says.
Ambipar used a portion of the proceeds to improve the company’s debt profile. According to Arruda, the opportunity to increase the value of the bond to $750 million enabled Ambipar to extend the average life of its debt from 3.5 years to more than 5 years. Five domestic debentures with tenors between 2024 and 2028 were pre-paid, and the company’s net debt dropped R$385.1 million ($63.8 million) in the third quarter of 2024. Its leverage ratio, meanwhile, fell from 2.99 times to 2.66 versus 12 months prior.
Arruda says Ambipar will going forwad keep an eye on the market to pursue new deals opportunistically if they help further improve the company’s debt profile. He is also optimistic that it will remain possible to raise money on attractive terms for projects linked to the environment and infrastructure, as he believes that demand for the kind of services Ambipar provides will remain robust for the foreseeable future.
“Independently from interest rates in Brazil or the US GDP, environmental targets continue to expand, and several sectors continue to intensify their decarbonization and circular economy efforts,” he says. “Even then, we want to keep a cautious financial approach, prioritizing cash flow generation, ensuring longer debt tenors and maintaining liquidity levels that will enable us to navigate a business environment that may become more challenging.”
Founded in Brazil in 1995, Ambipar today serves over 15,000 clients and has operations in over 40 countries, including Argentina, Brazil, Colombia, Mexico, and Peru, where it offers a portfolio of environmental services, chief among them waste recovery and response to environmental emergencies. The company states that its mission is “to promote ecological transformation, investing in decarbonization, circular economy, energy transition and environmental regeneraton.”