Category: Brazil

Amil Participacoes, a Brazilian holding company focused on the medical sector, says it is acquiring a 51.9% stake, or 36.2m shares, in medical insurance provider Medial Saude for BRL612.5m in cash. The buyer says in a regulatory filing that with this transaction, its market share in Sao Paulo will increase to 15.1% from 7.9% and in Brazil to 10.1% from 6.2%. It will also have a total of 4.2m health plan beneficiaries and almost a million dental plan beneficiaries. The transaction is subject to approval by the National Supplementary Health Care agency and will then be submitted to the Brazilian anti-trust authorities.

S&P has raised Brazil-based meat manufacturer Minerva to B minus with a stable outlook, from CCC+ on stronger operating cash generation, improving market conditions for local and export meat sales, and measures taken to strengthen the financial profile. “Minerva’s ability to sustain adequate liquidity throughout the industry’s downturn and the recovery in its Ebitda margins since mid-2009 are also positive rating factors,” says S&P analyst Piero Parolin. The action takes into account Minerva’s recently concluded BRL$159m equity offer and the agency’s expectation that credit metrics will continue improving on stronger cashflow in 2010. S&P notes Minerva’s leveraged financial profile and significant interest burden which, despite efforts to reduce interest costs, will continue hampering the ability to report significant free cashflows. It also sees a dependence on successful ramp-up of expansions and greenfield projects, including Minerva Dawn Farms, to maintaining improving cashflow. On top of that, S&P sees as a risk exposure to the highly competitive global meat industry and still-weak credit metrics.

Brazilian logistics company America Latina Logistica (ALL) has sold BRL1.3bn in convertible debentures due 2012. Major shareholders of the company subscribed BRL464.7m in notes which can be converted into 211m common shares, with a lock-up period of 3 years at BRL2.20 each, or units with immediate liquidity at BRL12.10. If held until 2012 maturity, the notes pay IPCA inflation plus 3.0%. ALL plans to use proceeds to help fund a 5-year investment plan. Following the deal, shareholders increased their stake in ALL to 57.2%, or 726m shares.

BNDES has approved a BRL4.4bn loan for telecom Oi, it says. The 9-year loan pays TJLP plus 3.95%, according to officials at the Brazilian state-run development bank. Oi, also known as Telemar, will use proceeds to help finance its BRL12.3bn 2009-2011 investment plan to boost its number of subscribers by expanding its network.

Starting today, Brazil will begin taxing the sale of ADRs by Brazilian companies. The move is designed to balance out an October 19 decision to impose a 1.5% tax on inbound capital flows destined for stocks and bonds issued by companies, according to the finance ministry, which posted a statement on the matter Wednesday. Following the October decision, market participants believed the ADR market would grow substantially as issuers sought to access foreign capital by bypassing the Bovespa and going straight to the NYSE with an ADR. Yesterday’s decision by the Ministry of Finance is meant to close the loophole. At the time of the first tax announcement, BMF&Bovespa and other market institutions protested the move saying it would draw liquidity away from Brazil.

Brazil’s BNDESPar says it will hold a roadshow on November 24-30 to market its new debenture issue that could raise the investment arm of the BNDES between BRL1.00bn and BRL1.35bn. It plans to issue two series, one with a fixed interest rate due 2013 and the second with an interest rate pegged to the IPCA due 2015, says the bank. The rate will be determined during a bookbuilding process, set to begin December 14. Proceeds will go towards strengthening the bank’s capital base. Banco do Brasil is managing the sale.

Brazilian steelmaker Gerdau has given 7.375%-area yield guidance for its 2019 bond, expected as early as today, according to investors looking at the deal. The issuer is expected to sell $1bn of the new bonds, after having completed a US and European roadshow Tuesday. The BBB minus deal is to be issued by Gerdau Holdings and guaranteed by several operating units, with proceeds marked for refinancing debt. Six banks have joint books – believed to be a record for a LatAm bond – with HSBC and Santander as active bookrunners, Itau as quasi-active, and BofA-Merrill Lynch, Citi and JPMorgan as passive.

In a sign that Brazilian banks are stepping up their dollar lending, Banco do Brasil (BdB) has agreed to lend Samarco, an iron ore mining venture jointly held by Vale and BHP Billiton, up to $300m in 5-year bullet funds. The offer torpedoes the hopes of more than 10 mostly international banks that also bid for the deal. Executives on the transaction decline to specify pricing on the bilateral agreement, and note the exact amount to be funded may actually turn out to be lower than $300m. But bankers away from the process guess the facility may have gone for well below Libor plus 275bp, on an all in basis. That is seen by other lenders as hard to beat for a 5-year bullet loan. The few 5-year transactions that have actually gained traction recently on the corporate loan side have been amortizers, and most borrowers have tended to focus on 3-year facilities. The move is indicative of a growing appetite on the part of BdB to beef up its lending to Brazilian corporates, say observers. “I think you’ll start to see a lot more of this,” remarks a New York-based syndications executive. “Brazilian banks are being very aggressive and their cost of funding is coming down. “Local lenders generally have had a higher cost of funding [in dollars] than international banks,” adds a Brazil-based banker, noting native institutions are generally quite comfortable with longer tenors and credit risk for deals done in BRL. “[BdB’s] goal is to be the leading bank in this market in the country,” according to a person familiar with the bank’s initiatives. The state-owned bank has always been an active participant in the BRL-denominated bilateral market and an increasingly frequent taker of large tickets on international deals, such as Odebrecht’s recent $1.3bn 10-year project loan and Fibria’s ongoing $750m 5 and 7-year corporate loan syndication. But the fact that it has beat out foreign banks on a dollar deal by offering cheaper pricing is notable, and some say a sign of more to come from Bd

Brazilian steelmaker Gerdau says it is considering acquiring all of the shares of Acos Villares as part of a streamlining of its corporate structure. One of its subsidiaries Gerdau Metalurgica holds a 29% direct stake in the company, while Sidenor, which is held by Gerdau and Santander, owns 58% indirect stake, according to Economatica. Gerdau says in a statement it may offer to acquire the entirety of the company at a ratio of 26-30 Villares shares for each share in Gerdau SA. Villares shares closed Friday at BRL0.95.

Fitch has given an A local rating to Energisa’s energy distribution subsidiaries’ debenture issuances. The outlook is stable. The issuances rated are Energisa Paraiba’s BRL80m first debentures issuance, due in 2014 with an early redemption option in 2012; Energisa Sergipe’s BRL60m second debentures issuance, due in 2014 with an early redemption option in 2012; and Energisa Minas Gerais’ BRL60m second debentures issuance, due in 2014 with an early redemption option in 2012. The ratings, says Fitch, reflect Energisa’s consolidated credit profile with moderate leverage, adequate debt profile, robust liquidity, resilient and predictable operating cash flow from its five distribution subsidiaries that operate essentially as regulated natural monopolies and benefit from a diversified and growing client base.