As a leading player in the clean energy industry, it was just a matter of time before Brazil’s Raízen turned to the global sustainable finance marketplace to raise capital.
The company last March issued $1.5 billion in hard currency green notes, in a debut sustainable deal that was more than 5.4 times oversubscribed at the peak of the pricing process.
It was at once a hefty and important transaction for the sustainable finance marketplace not only in Brazil but in Latin America more widely.
The deal, which wins Sustainable/ESG Deal of the Year, was split between a 10-year, 6.45% tranche of green notes worth $1 billion, and a $500 million, 30-year tranche paying a 6.95% coupon – the first 30-year issuance by a Brazilian company since October 2020.
Raízen points out that the deal marked the return of the company to global debt markets after three years. It was one of the largest transactions by a Brazilian corporate in recent times, and featured some of tightest ever spreads by a Brazilian issuer, according to the company, tightening by 30 basis points and 45 basis points respectively for 10-year and 30 year-tranches, thanks to substantial demand from cross-over investors, complemented by dedicated emerging market and ESG-focused funds.
Final pricing represented a 20 basis point differential compared to the Brazilian comparable 10-year curve. In the case of the 30-year bond, the differential was 10 basis points.
The issuance was part of the company’s Green Financing Framework, according to which proceeds will be used to finance or refinance assets and projects relating to renewable energy projects, particularly the production of sugarcane ethanol biofuel, the co-generation of energy from biomass, the bio-digestion of industrial residues for the production of energy and the production of solar energy, among others.
Spurred by the success of the March transaction, Raízen, which also wins Corproate Issuer of the Year, returned to the international market in September to issue $1billion in green notes due in January 2023, in a deal that was 3.6 times oversubscribed, according to sources.
The company also placed two debentures in the domestic market, totalling over R$2.5 billion ($414.5 million). The first one was a seven-year, R$1.05 billion issuance closed in June, the second ever debentures deal done by the firm. In September, the company hit the market once again with a two series transaction, with maturities of ten and five years totalling R$1.5 billion. Its subsidiary Raízen Energia also placed two securitization deals via the CRA debt securities traded in the Brazilian market.
The activity reflects efforts made by the company to improve its debt profile, which includes the possibility of divesting some assets, the company pointed out in regulatory filings.
Raízen closed the quarter that ended in October 2024 with a total debt of R$49.7 billion ($8.2 billion), a 34.5% annual increase. Of that, R$32.5 billion ($5.3 billion) was denominated in foreign currency, a number that was 57.3% higher than in the same period of 2023.
Raizen, a joint venture controlled 50%/50% by Cosan and Shell Plc, occupies a leading position in the sugar and ethanol industry and is the second largest player in Brazil’s fuel distribution market. This combination, according to Fitch, gives it a unique business scale and diversification, differentiating it from its competitors operating in Brazil.
Global Coordinators: Citi; Itaú BBA; JP Morgan; Morgan Stanley
Joint Bookrunners: BNP Paribas; BofA Securities; Bradesco BBI; Santander
Issuer’s Counsel: Simpson Thacher; Stocche Forbes Underwriters’ Counsel: Milbank; Pinheiro Neto
Auditor: EY Trustee: BNY Mellon
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