Category: Brazil

Spain’s Repsol is considering ways to finance investments it must make to develop the large amounts of Brazilian offshore oil reserves that have recently been discovered. It is already deploying EUR500m in capex through 2012 to develop the Carioca field off the coast of Rio alongside Petrobras and Grupo BG, according to a recent presentation. And it is considering similar arrangements with other operators, as well as farm-outs of portions of its other fields, according to a company executive. Repsol has also been cited as a candidate to list shares in Brazil to help finance growth. Investors and bankers agree it would make a strong candidate for the BDR market, given its scale and the significant amount of investment it can make in the country in coming years. “It’s still premature to talk about an IPO,” says the executive, who does not deny the company has considered such a move. Elsewhere in LatAm, Repsol continues to seek strategic alternatives for its stake in Argentina-based Repsol YPF, the $17bn market cap company in which it holds an 84% stake. Plans for a $4bn 2008 IPO were shelved as market conditions for Argentine issuers became difficult and its local partners – the Argentine Eskenazi family, which owns a 15% stake and an option to purchase another 10% – are working with Repsol to find a buyer. “We want to sell down to around 55% or so,” says the company executive, who emphasizes Repsol’s interest in maintaining a controlling stake in YPF. Credit Suisse was hired to manage the IPO and is understood to still be involved with YPF.

This week’s Brazilian bank debt bonanza has extended to institutions of all sizes, with BicBanco getting $275m from the sale of 2013 notes. The mid-sized payroll specialist priced the Ba1 deal at par with a 6.25% coupon to yield UST plus 480.2bp. Demand reached more than $400m, according to a banker on the deal, who notes strong private bank participation. HSBC, Itau and BofA-Merrill Lynch managed the sale. It is a sizeable sale for BicBanco, which sold $130m in 7% of 2010 bonds at par in April 2008 through Banco do Brasil and Banco Votorantim, before reopening for $50m the following month.

Brazil’s Grupo Schahin has renegotiated terms on its Black Gold drillship loan, which ran into construction delays at China-based Yantai Raffles shipyard. The amendment, finalized late in 2009, clears the way to start financing a new $1.4bn Petrobras twin drillship, which bankers say will launch in Q1. Like its immediate predecessor, Odebrecht’s Norbe XIII and IX twin rig, Black Diamond – as the new Schahin facility is called – is expected to count on Norwegian and Korean ECA support for close to $900m, according to a banker close to the process. Some $450m or more in commercial loans is seen making up the difference, he adds. However, it is not yet clear what structure will be used to finance the ships, or if both will be syndicated simultaneously. Bankers note that Norbe provides the clearest comparable for pricing and structure of Black Diamond, though market conditions may turn out more favorable. This could help Schahin – which is viewed as lower credit quality than Odebrecht – achieve better pricing than last year. Standard Chartered, Unicredit, WestLB and Mizuho signed agreements with Schahin in 2008 to lead the upcoming syndication. As for Black Gold, the delay in delivery has cost the sponsor a substantial sum. To accommodate delays, the 3-year construction period on the loan was extended by 1 year at a cost of 162.5bp to Schahin. The spread over Libor for construction now stands at 400.0bp, up from 237.5bp prior to renegotiation. Banks who participated also demanded an update to the pricing on the post-completion period to reflect current market conditions. The 7-year post-completion now pays 300bp over Libor, up from 200bp. Original lenders on Black Gold, launched in 2007, are Unicredit, Mizuho, Standard Chartered and WestLB.

Brazil’s Banco Votorantim is out with 7.5% area yield guidance on a new Tier 2 bond, set to price as early as today. The bank plans “benchmark” size, which generally means at least $500m. It was due to have limited investor meetings Monday and today, after having visited the buyside on a more extensive “non-deal” roadshow in December. Bank of America-Merrill Lynch, Banco do Brasil, Deutsche Bank and Itau are managing the sale, which will raise funds for general corporate purposes.

Empresa Interagricola (Eisa,) the Brazil-based unit of commodity shop Ecom, has raised a $50m credit line with a group of international banks. The 1-year senior pre-shipment export facility, which pays Libor plus 250bp, was closed in the final week of December. Proceeds will support the company’s exports, which include largely cotton and coffee. Standard Chartered led the deal with Natixis, ING and Fortis joining as joint books.

BNDES has approved a BRL826.1m financing for Sao Paulo water utility Sabesp, through the private purchase of 11-year bonds. The amount is to be split into 3 separate BRL275.4m transactions. The first wrapped up before year-end and includes BRL192.7m in notes paying TJLP plus 1.92% and BRL82.6m paying IPCA plus 9.79%. The next transaction will close this year and the third in 2011. Proceeds will fund Sabesp’s BRL1bn investment plan, including 5 projects to build and upgrade waste systems, and make water systems more efficient and less energy-intensive. Separately, Sabesp is in the process of completing a BRL600m 2014 bond in the public market through Banco do Brasil. That A+ transaction is expected to pay DI plus up to 3.5%.

Wal-Mart’s Brazil unit has suspended a supply contract with Cosan after the Brazilian sugar producer was included on a government list of companies whose workers operate in slave-like conditions. Cosan has expressed surprise at the decision to put it on the list and is pursuing legal channels to clear its name. According to Cosan, it was put on a blacklist because “a services provider to sugarcane suppliers which are also part of Cosan’s supply network” infringed a labor regulation in 2007. Cosan says it took measures to exclude the firm from its sugarcane supply network and says it “vehemently repudiates any kind of practice that infringes labor rights of its employees and the employees of its partners or suppliers.” Wires reported that Cosan stock rallied late Friday on news that the Brazilian agriculture minister had conceded that the blacklisting was a mistake. Cosan issued a statement saying a regional labor court has approved a request for the removal of the company’s name from the labor ministry’s list of companies that employ workers under slave-like conditions.

French entertainment and telecom company Vivendi is launching a tender offer for up to 18.1m outstanding common shares in GVT, corresponding to 13,22% of the total capital. The offer price is BRL56, paid in cash and the deal is through an auction in the electronic trading system of BM&FBOVESPA. Vivendi said last week it had raised its stake in the Brazilian telecom operator to 85.7% from 78.7%. In November, it announced that it had acquired a 57% stake in GVT through a combination of private negotiations with the telecom’s controlling shareholders and open market purchases, valuing the target at BRL7.17bn. GVT was advised by Barclays, Credit Suisse and Goldman Sachs. Vivendi was advised by BNP and Calyon.

Brazil’s Trisul plans to raise BRL300m from Caixa Economica federal through a 2015 debenture transaction. In the deal similar to one the federally backed bank did last year for fellow real estate developer Tenda, Caixa will release the funds from the FGTS guarantee fund into a special account Trisul can use for project development, according to a Trisul IR official. A portion of the issuance will pay interest at the TR rate plus 8.5% and the remainder at TR plus 10.5%, depending on the value of the projects Tenda acquires with the funds. The deal is managed by Planner Corretora and features a 3-year grace period. The developer aims to close the transaction by the end of the month or early February. Trisul is rated A minus on a national scale.

Banco Votorantim is targeting next week for the sale of 10-year Tier 2 bonds. The Brazilian bank plans a “benchmark” sized issue, which generally means at least $500m. It is holding calls today ahead of 1-on-1 meetings Monday in New York and possibly Tuesday in Boston. Marketing is being kept short, as the issuer met US and European buyers last month on a “non-deal” road show. Pricing is expected in the middle of next week. Bank of America-Merrill Lynch, Banco do Brasil, Deutsche Bank and Itau are managing the sale, after having handled last month’s meetings. Proceeds from the Baa2 sale are for general corporate purposes. Votorantim last tapped markets in 2006, with a $200m in 6.75% of 2016 bonds through BNP and Citi. Bradesco reopened the post-crisis Tier 2 market for the region in October with $750m in 2019 Tier-2 bonds priced to yield 6.75%. Compatriot Banco BMG followed with $300m in 9.95% of 2019s to yield 10.25%.