Category: Bonds

Itau has emerged to raise $1.25bn in 2022 Tier 2 bonds, drumming up around $3.3bn in orders. The Brazilian bank priced the unsecured subordinated bond at par with a 5.500% coupon, to yield at the tight end of 5.500%-5.625% guidance, revised from mid to high 5%. The bonds traded up 0.375 points in the grey Monday afternoon, according to an investor. Itau offered 25bp concession versus pre-announcement levels on its outstanding 2022 Tier 2 bonds, seen at 5.25% yield. “The deal is fair given that the issuer was pretty conservative from the start,” says a banker away from the sale. The sale follows a similar $1.25bn 2022 Tier 2 sale in March. Beginning January 2013, banks will no longer be allowed to issue under the current Tier 2 format. Itau chose to issue a new 2022 for this reason, according to a source close to the sale, seeing the possibility to issue a larger size via a new bond than through a retap of the 2022s. Monday’s issuance is similar in structure, size and maturity minus a few months. Over 200 accounts participated, with a mix of private banking and institutional investors, according to sources familiar with the deal. The issuer has an option to exercise up to 10% greenshoe during Asian hours. Proceeds will be used to strengthen the bank’s capital structure and for general corporate purposes. Itau, JPMorgan and Standard Chartered managed the sale.

Santander Brasil’s leasing arm has completed a BRL5bn ($2.48bn) debenture transaction, according to the CVM. The 2032 notes pay 100% of the DI, with the proceeds funding operations. Santander managed the sale itself.

A BRL600m ($297m) sale from BR Properties has capped off a week of large transactions in Brazil’s local bond market, which underscores continued record issuance volume while other LatAm markets slow. The driver remains the same: investors continue to show demand for corporate debentures as government bond yields become less attractive. “Many investors are looking at corporate credit, as the lowering of the Selic means they must search for yield outside of government bonds,” Debora Jalles, analyst at Fitch, tells LatinFinance. She expects a continued favorable scenario for corporate issuers in the second half of the year. Falling interest rates – 450bp so far in the current cycle – are not new, of course, but the expectation for continued cutting continues a trend present all year, pushing issuance to new highs. “We expect to see this issuance continuing in the rest of the year,” says a Sao Paulo-based DCM banker. Through Friday, debenture issuers had raised BRL8.31bn in rule 400 (unrestricted) bonds – excluding leasing transactions – according to the CVM, and BRL32.93bn in rule 476 (restricted) debentures, according to Anbima. This compares to BRL3.18bn in rule 400 sales and BRL30.84bn in rule 476 deals during the corresponding period in 2011. The challenges going forward are extending tenors, still under 7 years for most corporate borrowers, and getting the first issue out the door under tax-exempt bonds designed to encourage issuance funding infrastructure. BR Properties issued BRL600m in domestic bonds, using an overallotment to increase from BRL500m, after upsizing from a planned BRL400m. A BRL369m 2017 tranche pays DI+1.08%, coming in under a 1.20% ceiling. A BRL231m 2019 inflation-linked tranche pays 5.85%, inside of a 6.15% ceiling. The commercial real estate specialist is raising funds to repay short-term debt. Banco Votorantim, Bradesco, BTG Pactual, Citi, Itau and Santander managed the sale, rated AA on a national scale. The deal follows transactions fro

CPFL Piratininga has completed the sale of BRL110m ($54m) in domestic, bonds, according to Anbima. The unit of CPFL’s 2019 debenture pays DI+0.80%, and amortizes in three equal parts during the final three years. Bradesco managed the sale, done under the rule 476 restricted format. It follows the parent’s own BRL660m 2019 sale closed earlier last week, also at DI+0.80%.