Category: Brazil

Daniel Dantas, the foremost executive of Brazilian investment fund Opportunity, and Naji Nahas, a wealthy investor with a colorful history involving large investments in Brazil, allegedly held multiple discussions on ways to profit from the eventual establishment of a sovereign wealth fund (SWF) for Brazil, Estado de Sao Paulo reported over the weekend. The paper quotes a police report signed by a senior official that affirms the authorities had tracked the two and that Nahas was reportedly using insider information to market his plan with potential investors. Dantas and several Opportunity executives were arraigned last week in relation to an investigation dubbed Operation Satiagraha.

Fitch has revised Brazilian industrial conglomerate Camargo Correa’s ratings outlook to positive from stable and has affirmed the company’s rating at BB. The agency also affirmed $250m senior unsecured bonds due 2016 at BB from Camargo Correa’s subsidiary CCSA Finance Limited. The move reflects the improved Brazilian economic environment that has favorably affected much of Camargo’s businesses, particularly in its cement, engineering and construction businesses, says the agency. “Additionally, it reflects increased diversity of revenues and cash flows across industry and geography, lower leverage and better debt-service coverage ratios,” Fitch adds. “Nevertheless, the effect of its aggressive growth strategy on credit protection measures remains a concern and has been incorporated into the ratings,” adds Fitch.

The boards of real estate developer Trisul and residential builder MRV have each approved bond offerings in the local market. MRV plans to sell BRL300m in 2013 bonds paying interest at the DI rate plus a spread of up to 150bp. The sale through Itau, Bradesco and HSBC is the first from a BRL1.3bn program. Trisul is preparing to sell up to BRL200m in 2013 bonds at a rate still to be set, via Bradesco.

BNDES plans to create a two-year BRL1.5bn investment program aimed supporting Brazilian businesses in key sectors. The development bank’s BNDESPar arm will invest in up to 10 funds, consisting of up to eight private equity funds and two venture capital funds. It will limit participation to up to 25% of each venture capital fund and 20% of each private equity funds. The program will start with three private equity funds focused in areas of agribusiness, ethanol/biomass generation, and a focuesed on developing corporate governance across various sectors. The bank is soliciting applications for participation in the program and aims to select the first funds by November.

S&P has lowered its long-term corporate credit rating on Brazilian airline TAM to BB minus from BB, with a stable outlook. “The rating action reflects our expectations that, despite improvements in operating conditions and profitability projected for 2008, TAM’s credit metrics will remain depressed in the next couple of years due to slower market growth than we originally expected and fuel cost pressures,” says S&P. TAM has managed to sustain robust market shares both domestically and internationally and has significantly reduced non-fuel costs and expenses to preserve adequate levels of profitability, says the agency. “However, we expect TAM’s cash generation to remain compressed in 2008, particularly relative to its debt leverage,” notes S&P.

Brazil’s Banco Cruzeiro do Sul has postponed plans to issue dollar bonds until market conditions improve, an investor relations official at the bank tells LatinFinance. The bank had met with investors in the hope of landing a three-year deal worth around $100m. BCP Securities and UBS were leading the operation. Cruzerio do Sul raised $110m in 7.38% 2010 bonds in April.

Brazil’s IdeaisNet sold BRL100.5m in a special auction of 15m unsubscribed shares to existing holders. EBX’s Centennial Asset Mining Fund bought 8.2m of the shares, a piece equal to about 7.9% of IdeaisNet’s total capital, to add to the 6.5% stake it bought in May. The broadband provider pulled plans for a public follow-on in January. Batista told LatinFinance in May he believes the company could one day be worth $1bn.

The Peruvian branch of Brazil’s infrastructure outfit Odebrecht Investimentos em Infraestrutura (OII Peru) is the leading bidder in an upcoming September 9 auction to award rights to build and operate the PES830m+ ($300m+) Taboada sewerage facility in Lima, say executives at the company. OII Peru brought the idea to the city and as a result has the right of first refusal to any winning bid. The project is to be financed with roughly 10% in equity from the winning bidder, with the remainder being raised through a tariff hike, the proceeds from which will be put into a trust system that distributes the funds to the winning bidder, says the executive. The trust will feature a reserve guarantee backed by the sovereign in the event of a failure of the project. Notes issued by the trust will be denominated in soles and distributed to local investors.

Brazilian energy company Tractebel has agreed to buy two independent hydroelectric power plants totaling of BRL203.9m. Both the 26.6MW Tupan and 23.7MW Hidropower Energy facilities are located in Mato Grosso state. The two have been operating since 2007 and have long-term contracts with Eletrobras.

Localiza’s board has authorized it to raise up to $500m in the domestic or international credit markets, the company said. The Brazilian car rental provider expects to secure revolving credit facilities, and use the funds to extend its credit profile and make investments necessary for growth.