Category: Brazil

Brazilian insurance carrier Maritima Seguros is selling a 50% stake to Yasuda Seguros, a unit of non-life insurance carrier Sompo Japan Insurance, for about BRL336m in cash, much less than it was originally seeking. Maritima financial director Milton Bellizia told LatinFinance in March that the company was considering selling a roughly 40% stake for about BRL500m. The company wanted to sell a minority stake to a foreign buyer in order to capitalize on the growth it sees in the Brazilian insurance sector. The firm predicts that the insurance sector could go from a size of 3.4% of GDP to perhaps 6.0% in the next 5 years. A foreign partner would bring both capital and know-how to help the Brazilian insurer offer new and more sophisticated products that a maturing economy can support, according to Bellizia. Before the sale, he noted interest from the US, Europe and Asia. JPMorgan advised the target while Mitsubishi UFJ Securities advised the buyer, according to Dealogic. Maritima’s legal counsel was Mattos Filho, Veiga Filho, Marrey e Quiroga Advogados, the company says.

Ultrapar, the Brazilian energy distributor, has filed to issue a BRL1.2bn local debenture. The offering is designed to take out an equal sized 1-year promissory note via Bradesco that was raised in December of 2008, Pedro Wongtschowski, CEO of Ultrapar, tells LatinFinance. The new deal carries a 3-year tenor and has been guaranteed by Bradesco, the lead bank, at DI+300bp. The promissory note that matures this December carries a rate of CDI+360bp, according to a filing on the deal. In March, the company raised a BR500m 3-year CCB note with Caixa Economica Federal at a rate of 120% of CDI. Ultrapar’s total debt stands at BRL4.1bn, says Maristela Akemi Utumi, head of the company’s IR department. Based on the last 12 months, net debt to Ebitda is 2.0x, though using analyst forecasts for the forward 12 months the rate comes down to around 1.5x, says Wongtschowski. Ultrapar, which has done a series of large acquisitions in the past years, including Ipiranga and Texaco assets, says it is not eyeing big ticket M&A at the moment, though it sees an opportunity for consolidation in the Brazilian energy distribution and logistics market.

Brazilian power company MPX Energia has obtained a BRL1.4bn credit line from BNDES. The 17-year facility features a 3-year grace period and will help fund construction of the 720MW Pecem I power plant in the state of Ceara. MPX officials decline to disclose the rate on the facility, which in a typical BNDES loan is set at a spread over TJLP. The $2.8bn facility – a 50-50 venture with Energias do Brasil – already counts on a $147m IDB A loan agreed in March.

Brazilian power generator and distributor CPFL is hoping to tap the USD market as early as July with its first cross-border debt issue, CFO Jose Antonio Filippo tells LatinFinance. The company is in informal, “non-deal” talks with investors and bankers to identify optimal structure for an issue of $300m-$500m in size. Tenor would ideally be 10 years, but 5 years would not be out of the question, says Filippo. The executive says he wants to avoid having to finance long-term projects with the short-dated money available to issuers in the local market. Two year debentures offer reasonable rates, he says, but going as far as 3 years already incurs substantial cost, he notes. Companies like CPFL would face rates of up to 120% of the CDI in the local market for 3 years, while rough estimates for 10-year money in the dollar market can be found at comparable rates prior to a swap, Filippo says. For CPFL, a swap back into BRL or a hedge would be a necessary part of the process, which would increase the all-in cost. Ten year funds for CPFL – which could potentially achieve a high grade rating, given its capital structure and sector – are quoted vaguely by bankers in the 8% area, Filippo says. CPFL says it got reverse inquiry from bondholders interested in a new issue during this week’s visit to New York. HSBC, Santander and Citi are among the banks Filippo says he is considering as intermediary. CPFL’s dollar tap would be used to pay down local debt and for capex, though its refinancing does not rely on any kind of new issue, says Filippo. Some $200m in BRL debt come due in 2009. Average tenor for CPFL debt today stands at around 4.5 years and the CFO says he would like to keep it at around that level. CPFL was recently rumored to be considering a bond to replace a BRL495m 1-year CP done in April.

China funds may be the darlings of GEM investors, but Brazil funds are still among the favorites, reveals a Bank of America-Merrill Lynch survey of 220 fund managers with $617bn under management. The survey, taken earlier in May, finds that 80% of investors are overweight on China, up from around 50% in April. About 30% are overweight on Brazil, up about 5% since April. Investors are pulling out of Chile, however, says the survey, without stating why. While in April some 30% of investors expressed a negative preference to Chile, in May that had jumped to almost 50%. Investors are not so negative on Mexico. In May, almost 20% of investors were pulling out, down from almost 30% in April.

Brazil biofuel company Cosan says it has sold its aviation fuel unit to Royal Dutch Shell’s local subsidiary Shell Brasil for $75m in cash. The deal was privately negotiated, according to Dealogic. Cosan got hold of the unit when it acquired Esso’s operations in Brazil for $950m in April 2008. Calls to Cosan and Shell were not returned.

BTG Pactual, the growing Brazilian banking, trading and asset manager led by Andre Esteves, has poached 7 investment bankers from Credit Suisse’s Sao Paulo office, say Brazil-based investors and bankers. The move involves 2 senior bankers and 5 junior execution associates, all of whom have apparently left Credit Suisse without any significant cash guarantees from their new employer. Directors Marco Goncalves, in charge of M&A, and Joffre Salies, also responsible for M&A and other banking relationships, have departed the team led by Credit Suisse head of Brazil investment banking Jose Olympio. Also heard leaving are associates Bruno Amaral, Bruno Fontana, Guilherme Menge, Andre Quaresma and Bruno Prellwitz. The departures are a blow to Credit Suisse, which led Brazilian M&A last year but has fallen behind this year, according to Dealogic data. BTG, which most recently made a big splash by acquiring UBS’s Brazilian investment banking business, is on an aggressive hiring streak, say local bankers, despite the fact it is still hammering out partnership agreements with senior UBS Pactual executives looking to join Esteves’ firm. “BTG is very aggressive right now,” says a Brazil-based equity sales executive. “For Esteves, it’s going to be all or nothing.” BTG is also actively deploying capital into new deals, including private equity ventures and has partnered up with local retailer Insinuante to chase Globex’s Ponto Frio chain. BTG declines to comment on the hires.

Brazilian water utility Sabesp has approved the issue of BRL600m in promissory notes. The 180-day notes are expected to yield DI plus 3.5%. Proceeds will repay debt maturing this year. Banco do Brasil, Caixa Economica Federal, HSBC and Banco Votorantim are coordinating the sale.

Brazil’s Petrobras and BNDES have signed loans with the China Development Bank (CDB), coinciding with President Lula’s 3 day trip to China. BNDES has signed a letter of intent to borrow up to $800m from the CDB. Final details will be worked out at a later date, according to a BNDES official, with proceeds going towards lending that advances the interests of both Brazil and China. Fellow quasi-sovereign Petrobras has also finalized a long-awaited 10-year $10bn bilateral financing agreement with CDB, Petrobras says. The loan package will be used to finance the company’s $175bn 5-year investment plan, and includes the financing of purchases of goods and services from Chinese companies. The agreement also provides for increased oil exports from Brazil to China, though last month Petrobras confirmed that future oil output would not serve as collateral for the loans. A Petrobras spokeswoman declines to state the cost of the loan package. “The $10bn from China is only a fraction of the amount needed for Petrobras’ investment plans. Brazil is also in discussions with Japan, the US, and others for financing,” says Standard Chartered. The shop adds that talk of dropping the dollar in favor of using local currency to transact business between Brazil and China is “more political than anything else.”

Brazil’s Global Village Telecom (GVT) is seeking a way to roll some $200m in 12% coupon 2012 bonds into BRL-denominated debt. The Curitiba-based provider of VOIP and fixed-line services is in discussions with various banks regarding local issuance options, finance officials at the company tell LatinFinance, but no decision has been made. “The company does not have plans for a dollar bond issue,” an investor relations department official says. She adds that GVT has not contracted any banks to do so, despite reports to the contrary. There is about $200m outstanding in GVT’s 2012 senior notes, according to the company’s Q1 2009 earnings report.