Category: Brazil

After the rout, LatAm equity has recovered slightly, outperforming US stocks, but not as much as it overshot on the downside. Brazil’s Ibovespa rallied 4.59% to 48,142, off the day’s high at 48,658. It skidded as deep as 43,766 in the previous session, which saw the sharpest decline in more than a decade. The BRL meanwhile jumped 3% to BRL1.905/USD, after scraping 1.964/USD Monday. Other regional stocks and FX also experienced a relief rally, including Mexico, whose bolsa jumped almost 4% to close at the 24,889 peak. It scraped 23,789 Monday. The peso meanwhile flipped back to MXP10.94/USD, from MXP11 the previous day. The Dow Jones gained 4.7% after shedding almost 7% in the previous session amid a sharp uptick in volatility. “A version of the TARP still seems likely to pass the Congress eventually; there could be some amendments. The problem is timing,” says Citi. “These events are therefore likely to trigger a short-term bounce in Latin American equities from close to current levels,” it adds.

Mirabela, the Australian-owned nickel miner seeking funds for a Brazil project, has changed the terms on a $280m 6.5-year loan it is syndicating, due to a substantial rise in cost of funds at lenders. The margin has been bumped up to 325bp over Libor during the construction period, from the 250bp it was originally launched at, say people familiar with the terms. For post-completion, the margin has risen to 300bp. Up front fees have also been flexed up to 175bp for $30m tickets, versus 100bp, and to 125bp for $15m chunks, from an originally proposed 75bp. Lenders are at the mercy of a freezing of the interbank market that has pushed 3-month Libor to around 4.10% this week. The Mirabela project loan is part of a $518m financing package. Australia’s Mirabela has secured $100m in subordinated loans from the offtaker: $50m from Votorantim and $50m from Norilsk, the major Russian nickel producer. The Norilsk loan is convertible into 5m shares at $8.00 apiece. Barclays and Credit Suisse are leading the transaction, which was launched mid-September.

Brazilian car rental agency Localiza has suspended plans to issue BRL300m in 2012 debentures for up to 60 days, citing poor market conditions. It began the operation September 16 through Unibanco and aimed to set the coupon during bookbuilding. The issue was to be a follow up to an August offering of BRL300m in 2011 bonds at DI plus 180bp via Bradesco, as Localiza continues to raise funds to expand its fleet. LatAm’s largest car rental provider also has the option of short-term paper, having sold BRL300m in 1-year promissory notes at DI plus 95bp in February.

Brazil’s La Fonte Telecom, which holds a stake in the controlling group of Telemar, plans to sell up to BRL300m in 2015 debentures, following approval from its board. The bonds pay interest at 110% of the DI rate and amortize in three equal installments in 2013, 2014 and 2015. La Fonte does not state a bookrunner or timetable for transaction.

Brazilian steelmaker CSN plans to spend up to BRL410m on repurchasing as much as 10.8m shares. The program will last until October 29. CSN has 455.34m shares outstanding, which closed at BRL38 Monday, down from BRL44 Friday. Separately, falling prices of CSN ADRs could lead to significant losses on swaps tied to their price, JPMorgan says in a report. “The company has had substantial gains in this swap – around $300m in H108 alone. However, given that CSN’s ADR price has already plunged about 45% in 3Q08, we estimate that the noncash losses on this instrument may be up to $600m,” the bank says. CSN says it has made a net positive position of $845m since 2003 on the swap contract, which it renewed in July.