Category: Brazil

Brazilian concessionaire CCR is days away from signing a $310m financing package for the first phase of development of Sao Paulo’s Via 4 metro line, say people close to the company. A signing could come as early as Monday, with funding soon after. An IDB A/B loan is being arranged, with Banco Real leading the B portion. A 12-year B loan expected at close to $240m is heard with a margin of around 200bp, while a 15-year A loan from the IDB will cover the difference at a presumably higher margin. Strong interest from at least 6 other non-Brazilian commercial banks may lead to a downsizing of the A portion and an increase in the B, says an executive on the deal. Local giants Itau and Bradesco are not expected to participate. The Linha 4 consortium is made up of CCR (58%), a Banif fund (30%), Mitsui (10%) and operators RATP and BRT, from France and Argentina respectively, each with 1%. Linha 4 will be responsible for providing the trains and operating the metro lines, while the government of Sao Paulo is building most of the infrastructure. In order to bring BRL revenues in line with dollar liabilities, CCR says it will likely conduct periodic rolling hedges, meaning it will every 6 months or so lock in an FX hedge for the following 2-3 year period. “That seems to be the best way to do it,” says the executive, noting that this is more cost efficient than a long term cross currency swap.

Brazil’s Telemar, which is scheduled to wrap up Wednesday a three-continent roadshow for a $1.5bn bond sale, has axed plans for a 30-year tranche and put out price guidance for its planned 5 and 10-year notes. The telecom is heard to have found pricing for its desired 2014, 2019 and 2039 tranches higher than expected and chose to eliminate the longest piece, say people familiar with the deal. Bankers away from the deal speculate that new 30-year paper for comparable Brazilian high-grade, not seen in LatAm since the credit crunch, would price well north of 9.00% today. For the 2014 tranche, Telemar has issued guidance in the 7.75% area, and is shooting for the 8.50% area on its 2019s. The size of each tranche remains to be set. As the first significant deal through the gates this month, the BBB minus/Baa3 rated deal is expected to mark the new issue premium for LatAm high-grade. Proceeds will go towards funding the BRL13bn acquisition of Brasil Telecom agreed in April. Citi, Santander, Banco do Brasil, Bradesco and Itau are managing the transaction.

Brazil’s JBS has signed up for a level 1 ADR program. The Level 1 status allows for OTC trading but not a direct listing of shares on an exchange. As a result JBS does not plan to issue new stock or increase its capital through the new listing, though it presumably aims to increase exposure to a new investor base. The meatpacker has gained a large presence in the US after buying Swift in 2007 and Smithfield Beef and National Beef earlier this year. It expects to implement the program by October.

Moody’s has upgraded the Brazilian steelmaker and iron ore miner CSN to Ba2 with a positive outlook from Ba1 (positive). The agency cites the company’s strong debt protection metrics and liquidity over the past years. “The rating action reflects CSN’s maintenance, in spite of elevated dividends and share buybacks, and substantial ongoing investments to expand iron ore mining and logistics operations,” says Moody’s. The positive outlook reflects the expectation that CSN will continue to report strong operating margins and boost sales after increasing its ore, cement and long steel production capacity in the near term and the potential sale of a portion or all of CSN’s shares in its Namisa iron ore mine subsidiary. “Moody’s expects that the proceeds from the sale of shares in Namisa would help CSN to maintain adequate leverage and liquidity during the execution of its large capex program in the coming years,” the agency states. Namisa bids were due Monday, with executives away from the process expecting a price tag of roughly $8bn – shy of the up to $11bn the company said it would seek for the asset.

Brazil’s BNDES and Argentina’s Banco de la Nacion and Banco de Integracion y Comercio Exterior (Bice) will today sign a cooperation agreement in Brasilia to finance regional infrastructure projects designed to boost Brazilian and Argentine exports. Last month, BNDES announced a plan to make available $200m in financing for Brazilian companies to buy Argentine goods.

Merrill Lynch has tapped Alexandre Bettamio, head of its Brazil investment banking unit, to be its new Brazil country head and president of the shop’s local bank, called BMLISA. Bettamio replaces Richard Rainer, who left the US shop’s Brazil operation shortly after Bettamio’s arrival from UBS Pactual earlier this year. Bettamio and a team of bankers left Pactual for Merrill in March, and were joined by two senior Credit Suisse bankers, Sebastien Chatel for ECM and Adriano Borges for investment banking, at Merrill’s Sao Paulo office. Merrill says it is establishing a new country head structure in the region in order to better integrate its markets and investment banking division with its wealth management business in each country. Country heads will work with wealth management executives to grow business, says Merrill. Daniel Gonzalez, country head for Argentina, will assume the same role for Chile, Peru and Uruguay. Alberto Ardura, who covers fixed income, currencies and commodities in Mexico, will become country head too. Andres de Corral and Andrew Gray will be co- heads of CentAm, Caribbean and Andean regions. Separately, Carlos Gutierrez, head of Mexico’s investment banking business, will become chairman of ML’s LatAm business. James Quigley continues as president of LatAm and Canada.

Brazil’s Itau, which recently poached senior private banker Flavio Souza from UBS’s Zurich office, is boosting its bid for a bigger slice of Latin America’s growing private banking and wealth management market. In new offices in Miami and Zurich, Itau will install a team of six bankers, four of whom were poached directly from UBS. Souza and Marcelo Coscarelli, both of whom worked at UBS’s Zurich office, will relocate to Miami with the former heading the LatAm private bank and Coscarelli to head Banco Itau Europa’s Americas operations. Teodor Horat, from Hyposwiss Private Bank, will be a member of Itau Scwheiz’s board, while Daniel Esslinger from UBS will be head of sales and markets for the burgeoning branch. Stefan Jenni, also from UBS will work out of Itau’s Zurich office, as will Paul Hunt, who comes from Rothschild Bank Switzerland. More hires are forthcoming, says the Brazilian institution.

Brazilian miner Vale plans to invest $479m in a phosphate project in Peru. The Bayovar project, located near the city of Piura in Northern Peru is expected to have capacity of 3.9m tons per year and will start production in 2010, Vale says. The project includes construction of a phosphate concentration plant, roads and a silo. Last week, Moody’s upgraded Vale’s global local currency rating to Baa2 (stable) from Baa3 (stable), highlighting strengthened financial metrics brought by robust metal prices.

Brazilian rental car provider Localiza plans to sell BRL300m in 2012 bonds to raise funds to expand its fleet. It expects to set the interest rate during bookbuilding. Localiza plans to follow up with another BRL300m placement in October, as it aims to raise $500m in international and domestic debt by the end of the year. Unibanco is managing the sale.

Lojas Renner, the Brazilian department store chain, is paying BRL670m for its rival Leader. Renner agreed to buy 100% of the shares of rival Leader Varejo, the retailing arm with 39 stores along the central and northern coastline of Brazil, and 50% of Leader Credito, a consumer financing unit. Bradesco owns the remaining 50% of Leader Credito. The deal was set in motion in March and closed Wednesday. Renner will pay out BRL440m for the shares initially, and an additional BRL230m over the coming 5 years.