Category: Brazil

Brazilian electric distributor Ampla Energia e Servicos is planning to sell BRL250m in domestic bonds. Ampla, a unit of Spain’s Endesa operating in the state of Rio de Janeiro, does not disclose the timing of the operation or details of the issue, which still requires regulatory approval.

Queiroz Galvao, the Brazilian concessions operator, is rekindling the project loan syndications market with the $220m 7-year final Atlantic Star facility for a renewed Petrobras contract. The fully amortizing loan pays Libor plus 382bp – an unusual number because of a liquidity premium – and a banker away from the trade says fees are 200bp-250bp. The financing via WestLB is out to a group of banks and hopes to sign by mid-October. The sponsor, which operates the Atlantic Star platform, has renewed its contract for the ship with the Brazilian state oil company and renegotiated up its day rates thanks to a limited supply of operating platforms relative to the demand for exploration, thereby boosting the value of the concession. Atlantic Star is the first open syndication to hit the project market in months. One of the last to come was a $230m 7-year for AES Campiche, which was forced to halt syndication in Q2 because of an environmental licensing issue. In the drillship space, Odebrecht is heard close to funding a $1.3bn 10-year project loan. The broadly distributed facility, whose original leads include Santander, SocGen, BNP, Calyon, BES and HSBC, is technically a club, say bankers on it, though it bears many characteristics of a market-driven syndication. “There are still 15 banks very interested in this segment,” says a banker close to one of the transactions. “Nobody has been booking deals this year,” he adds, referring to pent up demand. A deal for Alpha Star is expected in the medium term.

Bank of America-Merrill Lynch has improved its forecast for Brazil’s GDP growth in 2010 to 5.3% from 4.5%, reflecting a faster recovery of labor conditions. It is keeping its 2009 forecast intact at 0.5% growth.

Brazilian steel and mining company CSN has clinched BRL1.3bn in new export credit notes with 5-year final maturities. Banco do Brasil provided a BRL1bn line, while its subsidiary Banco Nossa Caixa provided a BRL300m credit. The company and bankers decline to specify pricing. Barclays Capital believes the funds are being used to refinance existing export finance maturities.

Brazil’s Hypermarcas is acquiring diaper company Pom Pom Produtos Higienicos and its subsidiaries for BRL300m. It will pay 40% in cash and the remaining 60% stake in 5 annual installments adjusted by the CDI, says the buyer. Itau Securities, which says the price is equal to roughly 7.5x Ebitda, believes the price is in line with other Hypermarcas transactions. Pom Pom has sales of BRL250m, of which 45% comes from the infant diaper segment and 55% from geriatric diapers, says Itau. The company has a market share around 4%-5% in the infant diaper market and 40% in the geriatric diaper segment in Brazil. A Hypermarcas spokeswoman says the deal was privately negotiated and did not involve outside advisors.

Brazil’s two largest petrochemical companies, Braskem and Quattor, are in talks to merge, with the larger, Braskem, likely to be the main consolidator, say people close to the process. Reached by LatinFinance Friday, Carlos Fadigas, CFO of Braskem, limits his remarks on the subject to confirming discussions. Talks were apparently prompted by Petrobras’ desire to sponsor the creation a single, large petrochem giant to compete on a global scale. Petrobras is a minority shareholder in both Braskem, which is controlled by Odebrecht, and Quattor, which is held by Unipar. Estater is advising Quattor, while Morgan Stanley is heard aiding Braskem. Separately, Fadigas notes Braskem continues to evaluate North American targets, and is close to making an offer for an asset. He points to remarks made recently by CEO Bernardo Gradin that an offer will likely be made this year.

Goldman Sachs has recently hired 8 new private bankers and made 3 internal moves to bolster its newly launched Brazilian private wealth management (PWM) business. Beatriz Sanchez, regional manager of Goldman’s PWM group, tells LatinFinance she hopes to hire another 9-11 executives in the coming 12 months to fill out its offering, which target ultra high net worth clients with $10m or more to invest. “The trend for Brazilians [over the past few years] has been to keep [more of their investments] onshore,” says Sanchez, noting the new Sao Paulo-based effort will offer a broad array of products including equity and fixed income brokerage, alternative investments, futures and derivatives, all in local currency. Sanchez says Goldman sees LatAm as a growth area for its PWM business, though she declines to specify which countries in the region might be next on the list to have an office. The Sao Paulo office, Goldman’s first in LatAm, is headed by Gabriella Antici, CIO for Brazil and a 12-year Goldman employee. According to an internal memo, the new hires include Ciro Suplicy and Eduardo Ataide, both executives from UBS Pactual; Sasson Kazam, Marcio Poletto, Marcos Della Manna, Andre Moura and George Mera, all five from Itau Unibanco; and Sylvio Castro, which was most recently at a local family office and prior to that at ABN AMRO. All will be v.p.s at Goldman. In addition to these 8 recent hires, the Brazil office includes several other relatively new additions, including Marcia Zugaib, formerly of Gavea Investimentos, Andrea Cardia, previously at Alliance Bernstein, both in equity portfolio management; and Roberto Cintra and Mauricio Irie, both from Western Asset Management and who specialize in fixed income. Four others make up the roster on the distribution and product management side.

Brazil’s Embraer has sold $500m in new 2020 bonds to yield 6.500%, the tight end of 6.500%-6.625% guidance released Wednesday. The aircraft maker priced the 6.375% notes at 99.081 to yield 6.500%, or UST plus 327.7bp. Demand reached more than $2bn, according to investors, and the bond was heard trading up about 0.125-0.250 points in the gray Thursday afternoon. A 6.500% yield represents a concession of close to 50bp to Embraer’s existing 2017s, according to a sellside shop that spotted the notes late Wednesday at around 6.0%. Embraer will use proceeds to repay short-term debt and for general corporate purposes. Deutsche Bank and Morgan Stanley managed the sale, rated Baa3/BBB minus.

PDG Realty and Rossi Residencial will today price follow-on offerings worth up to BRL1.11bn and BRL1.06bn, respectively, using Wednesday’s closing prices as a guide. While the companies operate in the same sector and are bringing similarly-sized offerings, there is a substantial difference in market appetite. PDG Realty is heard already fully subscribed and likely to price at a small discount, according to sellsiders close to the trade. Investors are generally drawn to its strong performance since its 2007 IPO – the stock has more than doubled – as well as strong, financial-minded management and a mix of high, middle and low-income strategy, say bankers and investors. Rossi, on the other hand, is heard having to work harder to bring buyers in. A banker off the deal says rumors early Wednesday suggest the book was less than half full and that the company runs the risk of having to offer a bigger discount. Rossi’s stock is around 17% above its 2006 IPO price, according to Dealogic and analysts say the stock has been punished because of inconsistent communications with the market over the past 2 years. Barclays, for one, has Rossi as its top pick among the more liquid names in the sector. In a recent report it notes the company’s poor trading performance is not warranted. “We believe Rossi is a leading, competitive, capitalized and healthy company, with no solvency concerns or any material issue that provides a fundamental basis for the paper to be trading at such a discount to liquid peers,” says analyst Guilherme Vilazante. “Additionally, the management is aware of this situation and seems to be focused on improving communications with the market,” he adds, noting that Ebitda margins are in line or above peers. PDG Realty is offering 56.0m shares which can be raised by an additional 8.4m units in a greenshoe and 11.2m in a so-called hot issue. It is led by BTG Pactual, Itau BBA, Goldman Sachs and BofA Merrill. Rossi is offering 55.0m shares, which can be increased by