Category: Brazil

Brazil’s Rossi Residencial plans to raise BRL500m-BRL600m through a primary share offering. The real estate developer aims to take advantage of increasing demand spurred by the government’s Minha Casa Minha Vida program, it says, and will use proceeds to finance a new growth plan starting in 2010. Rossi does not indicate when the sale will happen. The move follows PDG Realty’s announcement Tuesday that it plans to sell up to BRL800m in new equity. Rossi closed Wednesday at BRL10.86.

Brazil real estate companies Agra, Abyara and Klabin Segall have announced they are merging, creating a new company called Agre Empreendimentos. Agre will have a market cap of BRL2.3bn and net equity of BRL1.5bn, making it one of the largest companies in the sector in Brazil. As part of the deal, 1.00 Agre share will be issued for each 5.19 shares in Abyara, each 4.85 shares in Agra and each 4.78 shares in Klabin Segall.

Brazilian fixed-line telephone operator GVT plans to sell 24m shares in a secondary offer. The trade would raise BRL800m based on Wednesday’s BRL33.40 closing price. Controlling shareholders GVT and Swarth Investments, which together hold 30% of the company, will offer stock on a date yet to be determined. Credit Suisse and Goldman Sachs are managing the sale, and have the option to add a 3.15m share greenshoe. GVT raised BRL1.08bn in a February 2007 IPO, and followed up with BRL428m through follow-ons in October 2007 and February 2008.

Brazil’s Companhia Siderurgica Nacional (CSN) plans to begin a roadshow in London Tuesday in support of a benchmark-sized bond issue. The rating agencies expect a 10-year bond of up to $750m, they say in reports assigning BB+ (S&P), BBB minus (Fitch) and Ba1 (Moody’s) ratings to the deal. The split-rated steelmaker will travel to New York September 10, Boston September 11 and finish in LA September 14. Itau and Morgan Stanley are managing the 144a/Reg S CSN transaction, done through the Islands XI special purpose vehicle created for the issue. CSN’s 2015 are trading to yield 5.75%-6.00% range says an investor, while a more liquid 2017 from fellow Ba1/BBB minus Brazilian steelmaker Gerdau traded in the low 6%s Tuesday. CSN’s last cross-border bond was a $750m 9.5% NC5 perpetual sold in July 2005 through Credit Suisse and Deutsche Bank. It nixed a 30-year late in 2006. CSN aims to be among the first Brazilian corporates out of the gate in what should be a busy fall issuance spree. Likely issuers include Banco do Brasil, Grupo Votorantim and Cemig. Juicy yields characterized the frothy June through August market, marked by hefty oversubscription and sharp aftermarket rallies. The big question for borrowers and their bankers is how far they can squeeze price. “There should be some overall spread compression, but it’s difficult to say how much,” says a New York-based DCM banker, noting that yield will depend on individual borrowers.

S&P has revised the outlook of BR Malls’ BB minus rating to stable from negative after the Brazilian shopping mall company had a BRL445m capital injection. S&P says the injection will help finance the company’s aggressive expansion program and reduce requirements of new debt. It also reflects its expectation that credit metrics will improve in 2010 with incremental cash flows.

The state of Pernambuco in Brazil is getting a BRL276m loan from BNDES to offset a decrease in revenues. The financing has a 9% interest rate, a maximum repayment period of 8 years and a 1-year grace period.

Brazil’s PDG realty plans to raise BRL750m-BRL850m through a primary share offering, as it makes use of improving market sentiment to raise funds for new projects. The developer plans to offer 56m shares, and arrives at the total range based on Monday’s close of BRL27.70 and considering a September 9 one-for-two share split. The lead bank may also exercise a 15% greenshoe. Investor presentations and bookbuilding are expected to begin September 21, with pricing likely October 1, according to the offering prospectus. UBS will manage the transaction, alongside Itau and Goldman Sachs. PDG shares closed Tuesday at BRL25.49. It is also preparing to raise up to BRL300m through the sale of 2014 debentures.

Brazil’s central bank is expected to leave the monetary policy rate at 8.75% following Wednesday’s meeting, having reduced it by 500bp since the start of the year. “Both the communique and the minutes of the July meeting widely telegraphed the board’s intention to interrupt the easing cycle, in our view,” says Bank of America-Merrill Lynch, adding that the bank “could more forcefully signal its intention to leave rates at the current level for an extended period of time.” Morgan Stanley, which also sees Brazil pausing, says that some board members of the bank considered not cutting at the July meeting.

Brazil’s Banco Cruzeiro do Sul is readying a $150m 3-year cross-border bond, according to a banker managing the sale, in a transaction likely to come mid-September. The Ba2 rated mid-size payroll lending specialist expects to pay a yield in the 8.50% area. BCP Securities is running the Reg S transaction. In June, Cruzeiro became the first mid-size Brazilian bank to issue in nearly a year, with a $60m sale of 9.00% notes priced to yield 9.75%, also via BCP.

Brazilian real estate investment company PDG Realty has authorized the sale of up to BRL300m in 2014 debentures. The issuer does not name the bank managing the sale or the price it expects to pay. It also approved a share split, to occur at an unspecified date in the future. PDG sold $276m in convertible 2012 debentures in April in a transaction guaranteed by BNDESPar.