Category: Brazil

Rumors indicate that acquisitive Brazil beef giant JBS Friboi will acquire peer Bertin, and although the companies are not saying anything, Barclays believes a deal could be beneficial for the alleged target. “Bertin’s bonds are trading at roughly 89, implying a market value of net debt of $1.8bn, which would make an acquisition of Bertin a $2.0bn-$2.5bn event. We would see a merger with Friboi as a positive for Bertin creditors,” the shop says.

Moody’s has upgraded the ratings of Brazilian cable company Net Servicos de Comunicacao to Ba1 (stable) from Ba2 to reflect resilience to the economic downturn. Senior analyst Soummo Mukherjee says the company has shown “continued strong growth in its subscriber base with no material increase in subscriber churn or delinquency, while maintaining low leverage and improved interest coverage that compare favorably to global industry peers and similarly rated LatAm corporates.” As of June 30, the analyst says, Net reported total cash and cash equivalents of BRL537m. That and expected cash generation should allow Net to comfortably address working capital and capex needs, interest and tax payments, as well as debt maturities that consist of BRL68m in the next 12 months and BRL250m in 2010, says Moody’s.

Brazilian homebuilder PDG Realty has filed a preliminary prospectus for a previously announced equity follow-on. The transaction involves the sale of 56m units, which using Tuesday’s close of BRL13.75 would result in gross proceeds of BRL770m. UBS has the right to place an additional 19.6m shares, which would elevate it to BRL1.04bn. The transaction is scheduled to price October 1 via UBS Pactual, along with Itau BBA, Goldman and BofA-Merrill as co-managers.

Brazil’s Multiplan has scheduled a follow-on of 26m shares for September 24, according to an ad published in local Brazilian papers. The company tapped UBS Pactual, Credit Suisse and Morgan Stanley to lead. Underwriters will be able to sell an additional 3.9m units. At Tuesday’s close of BRL25.20, the 29.9m offering would be worth BRL753m. Multiplan is one of a host of Brazilian real estate issuers hoping to raise local equity capital in coming weeks. PDG Realty, Brookfield, Direcional and Rossi are also teeing up to tap.

Brazilian meatpacker Minerva says leading shareholder VDQ Holdings has bought up the maximum amount of shares it was entitled to in the company’s ongoing rights offering. VDQ bought BRL108m worth of shares, which represents 68% of the total BRL159m the company says it will raise in an effort to improve liquidity in its stock. Holders of the company’s BEEF3 shares prior to August 31 can subscribe to the shares representing up to 40% of their holdings on that date until September 30. The company is also offering investors 2-year warrants at BRL5.30, a price that includes the BRL3.88 per share price plus a premium of BRL1.42. Any excess not sold in the rights offering will be distributed to the public between October 6 and October 8. Itau is managing the process.

Brazilian homebuilder Rossi Residencial is moving ahead with plans to issue equity. The company expects to issue 55m shares at an estimated average price of around BRL12.12, according to its most recent filing. The company is only the latest in a string of homebuilders targeting the follow-on market. Multiplan, Brookfield, PDG Realty and Direcional are also in the pipeline hoping to tap in the coming weeks, which should make for a crowded environment for the sector. Credit Suisse is leading Rossi’s planned deal.

Brazil’s Grupo Votorantim will today begin a roadshow for a benchmark-sized 10-year bond, scheduled to be wrapped up Thursday. The deal could reach $750m in size, say bankers on it. The recently downgraded Brazilian high-grade name (BBB/BBB-) comes to market at an optimal time. “The market’s feeling giddy and people are bulled up on LatAm, especially Brazil,” says a DCM banker on the deal. Yesterday, CSN’s tightly priced $750m 6.875% of 2019 bond traded up as much as 2 points in the gray, indicating a strong bid for sub-investment grade credit. “The guys at Voto must be loving this — it’s a nice little benchmark for them,” says an investor who bought CSN. Voto is led by Citi and HSBC on the left and Santander and Itau as joint bookrunners. The Reg S/144a deal is touring in 2 teams. The first kicks off in London today and tomorrow before wrapping up in the US West Coast Thursday. The second group is in New York today and Thursday, stepping out to Boston Wednesday. Votorantim CFO Joao Miranda and CEO Raul Calfat are on the tour.

Proving that you don’t have to be high grade to be aggressive on price, split-rated CSN has priced a $750m 10-year bond through guidance. The Brazilian steel and mining company cashed in on scarcity value and continued investor inflows to price at par to yield 6.875%, tight to 7.000%-7.250% initial talk. “I was shocked that the deal traded so well after being so tightly priced,” says an investor who participated. Despite the lack of pickup, the CSN order book was heard north of $4bn and the 2019 traded up 1-2 points in the gray market Monday. The New York-based buysider adds that the transaction was so tight relative to the company’s other high dollar-price issues that the concession was negligible. “[Benjamin] Steinbruck’s doing the usual, he’s driving pricing really tight,” adds the portfolio manager, referring to the CSN CEO. “We think CSN is a great company but the pricing ended up being a little too tight for us,” notes Edgardo Sternberg, portfolio manager at Loomis Sayles in charge of $6.8bn in EM bonds. “As funds have inflows, people need to deploy money,” he adds. CSN’s Monday issue, which came at 346bp over the 10-year UST, is the company’s first since 2005, which allowed it to capitalize on scarcity value. Itau and Morgan Stanley led the Ba1/BB+/BBB offer. The trade extends a run of increasingly thin concessions for investors, though it is the first sub-investment grade name to really test buyers. “The new issue concession that we saw earlier in the year has been disappearing,” notes Sternberg. Last week, Vale placed $1bn in 10-year notes to yield 5.727%, or UST+250bp, which was seen as aggressive. The deal was 8x subscribed. Higher rated Brazilian Grupo Votorantim, which kicks off a roadshow today for a new bond, will look beat CSN’s spread.

Brazil’s Banco Cruzeiro do Sul has raised $175m from a dollar bond issue, upsizing the deal from a planned $150m. The 2012 notes priced at 98.7 with an 8.0% coupon to yield 8.5%, in line with expectations. More than 100 institutions made up the roughly $200m book, according to a banker on the Ba2 deal. BCP Securities managed the sale. The issue is the second this year from a $1bn program, following a $60m June placement of 2011 notes yielding 9.75%, also through BCP.

CSN has put out 7.00%-7.25% yield guidance for its upcoming 2019 bond issue, according to investors. The Brazilian steelmaker was on the road on the east coast last week, and is set to wrap up today in Los Angeles. The Ba1/BB+/BBB- issue is expected be worth up to $750m. Itau and Morgan Stanley are managing the 144a/Reg S CSN transaction, done through the Islands XI special purpose vehicle created for the issue. Proceeds will go to replacing old debt.