BdB Upsizes Tier 2

In what is turning out to be a decent week for debt issuance, Banco do Brasil (BdB) has raised $750m in subordinated Tier 2 bonds, taking advantage of a window ahead of a possible volatility in the market. The issuer upsized from a benchmark size after getting $2bn in demand for a deal thought to be motivated by reverse inquiry. The state-controlled bank priced the 2023 at 99.023, with a 5.875% coupon, to yield 6%, or UST +434.1bp, inside of 6.00%-6.125% guidance. The bonds were trading up 0.25 in the grey Tuesday afternoon. “Accounts have money to put to work and are willing to invest in high quality names such as Banco do Brasil and Embraer,” notes an EM investor, mentioning another Brazilian that popped up to raise funds Tuesday. Leads were heard pinning a 15bp-20bp concession against its 2022, looking at a 5.67% yield and adding 6bp for the extension of the curve. The deal represents the first bank capital raised in the dollar markets in a few months, and one of very few bank capital transactions seen globally, according to bankers following the process. North American accounts took 43% of the book, EMEA 37%, and Asia 7%, with the rest allocated to Latin America, according to a source with knowledge of the sale. Fund managers took 32%, private banking 29%, banks and financial institutions 24%, pension and insurance 3% and hedge funds 11%, with 1% allocated to other type of investor. Banco do Brasil, HSBC and Standard Chartered managed the transaction, rated BB+. Banco do Brasil last visited the market in February, making a $750m opportunistic retap of its outstanding 9.25% Tier 1 NC11 Basel III compliant perpetual bonds. It reopened at 108.50 to yield 8.488%. The bank is heard to now turn its attention to the Yen market as the RFP deadline for a possible Yen closed on Monday.