Category: Bonds

While small even by domestic market standards at BRL25m ($12m), ACS’s Montes Claros transmission project has priced Brazil’s first infrastructure debenture to be placed with investors, according to sources familiar with the transaction. The 17-year inflation-linked debenture pays 8.75%, and features a security package pari-pasu with the issuer’s BRL123m in BNDES debt. Proceeds will fund about 10% of the transmission project. BNP Paribas structured and managed the transaction, placed with 18 of the bank’s Brazilian wealth management clients under the rule 476 restricted format. CCR’s AutoBan toll road unit is expected to finalize pricing as soon as next week for the first infrastructure debenture done under the more widely marketed rule 400 format. The BRL950m sale is to be the first sizeable infrastructure debenture, or domestic bond sold under legislation passed last year offering incentives to foreign and individual buyers as long as the use of proceeds is infrastructure-related. AutoBan plans a BRL850m 2017 tranche paying up to 109.2% of the DI, and a BRL150m 2017 inflation-linked tranche paying a fixed rate set to the yield of the government NTN-B bond at the time of pricing plus up to 0.25%. The deal is able to be upsized to as much as BRL1.28bn. Banco do Brasil, Caixa and HSBC are managing the sale, rated AAA on a national scale. For now infrastructure debentures large and small are likely to marketed to individuals, bankers say, with foreigners participating once the new asset class is better established.

Brazilian infrastructure group OAS plans to meet bond investors in Europe, and the US starting Friday, ahead of what would be a debut sale in the international market. The B/BB minus rated Brazil-based infrastructure group will visit accounts in beginning in Switzerland Friday, followed by visits to London, Boston and New York Wednesday before wrapping up in Los Angeles on October 11. A 144A/RegS dollar transaction may follow subject to market conditions. Banco do Brasil, Bradesco, BTG Pactual, Deutsche Bank, HSBC and Itau are managing.

Banco do Brasil (BdB) has returned to the dollar market for an opportunistic $1.75bn 10-year senior bond, getting more than $11bn in demand. “We have been starved for senior paper after seeing quite a bit of Tier 2,” says one investor following the trade, referring to recent sales from banks including BTG Pactual, BBVA Bancomer and Bancolombia. Banco do Brasil priced the new 2022 senior unsecured bond at 98.978 with an 3.875% coupon to yield 4.000%, or UST +237bp, tight to 4.125%-area guidance revised from earlier 4.375%-area initial talk. The transaction was trading up 0.40 points Tuesday afternoon, according to a trader. The deal priced flat to BdB’s $500m 3.875% 2017 senior bonds, according to bankers and investors. “It is not normal to see long-term senior paper, as banks usually go for Tier 2. BdB thought they could get a tight deal with a senior 10-year and that is exactly what happened,” says a person familiar with the trade, who saw the 2017s trading at a similar spread to new bonds. The deal was heard driven by US accounts, followed by some European participation. Banco do Brasil, BNP Paribas, Bradesco, BTG Pactual, Citi and JPMorgan led the transaction, with Banco Safra and Mizuho as co-managers. The issuer had the option to exercise a greenshoe for up to 10% during Asian market hours. The bank’s last transaction was a JPY24.7bn ($315m) Euroyen deal done in early September. The 2015 priced at par to yield 1.80%, or Yen swaps plus 146bp. BdB has issued $4.28bn in the international markets this year, according to Dealogic data, with Tuesday’s plain vanilla trade following an adventuresome string of issuance including JPY, Tier 2 and perpetual deals.