Category: Bonds

Brazilian beef company Minerva is considering a 2-4 month window to issue in either BRL or USD as it wraps up fixed-income investor meetings this week. The buyside has cash to put to work, but it is likely to demand a high premium if a junk credit like Minerva should opt for a global BRL bond, especially in a market that remains risk averse. “The number one focus is to tell Minerva’s story, but if there is an arbitrage opportunity [the company] will consider issuing in BRL,” says a person familiar with the company’s plans. For now, however, the borrower is gauging investor sentiment before venturing forth. “We are not planning to make any moves without feeling what the market is thinking about us first,” says Minerva IR official Francisco Assis. People familiar with the matter say talk about a potential BRL300m ($176m) 5-year is premature, and that for now the company is trying to assess where a single B credit could price. Indeed, it is still a matter for debate whether a sub-investment grade name like Minerva could even print a global BRL bond at this point. “I think it will be difficult to pull off,” says one investor. “[But] the fact that [BRL/USD] is currently at 1.71, versus 1.55 a few weeks back is a positive, and represents a better entry point for any BRL-indexed investor.” The problem is that investors have already had their fill of investment-grade BRL bonds at relatively attractive yields, including Coelba’s BRL400m 11.75% 2016 and Brasil Telecom’s BRL1.1bn 9.75% 2016. To interest accounts, Minerva would have to offer higher levels than these trades and come with a decent premium to its USD-denominated 2019s, which were trading at around 10.77% area on a yield-to-worst basis as of Friday. “If they are willing to pay 15%-17% they may find demand,” but such levels could also reprice Brazil’s corporate BRL curve, says a rival banker. Still Minerva does have certain technicals working in its favor. “Investors’ cash levels appear higher today than earlier in

Cemig’s Transmissora do Atlantico de Energia Eletrica (Taesa) is most likely to hire Bradesco, Citi, and Santander to manage an international bond transaction as it seeks to finance the purchase of a 50% stake in Abengoa Brasil, CFO Luiz Fernando Rolla tells LatinFinance. “We haven’t finished the list yet as we are considering other banks,” he adds. The electrical transmission company is seeking BRL1.2bn ($703m), though it is still evaluating whether it will opt for a BRL or USD-denominated transaction. “A global BRL is one of the preferred alternatives, though if we do a dollar deal we have to consider hedging costs associated with that transaction,” he says. Rolla estimates 30 days before the company will commence a roadshow to meet with investors. In June, Spanish engineering company Abengoa announced its intention to sell a 50% stake in four transmission concessions and 100% of concession company NTE in Brazil for EUR485m ($673m) in cash to Cemig. Considered one of the largest electric power transmission companies in Brazil, Taesa was established in 2006 as a holding company under the name Terna Participacaoes. Taesa last came to market in 2010 when it raised BRL600m through a 2-tranche domestic debenture offering, via Banco do Brasil, BTG Pactual, Citibank and HSBC.

Brazil’s Telemar plans to raise BRL500m ($294m) in domestic 2018 bonds, it says. The notes sold through the Telemar Participacoes unit will pay the DI rate plus 1.35%. The telecom, which recently raised a global BRL1bn bond, is looking for funds to repay maturing debt. Banco do Brasil is managing the sale, done under the rule 476 restricted format and is rated Aa1 on a national scale.

Banco do Brasil is heard having awarded a mandate for another international bond transaction, according to bankers following the deal. A frequent issuer, Banco do Brasil last came to market in May when it issued $1.5bn in 2022 bonds (Baa2) via BAML, Banco do Brasil, BNP Paribas, JPMorgan and Banco Votorantim.

CCR AutoBan has mandated Bank of America Merrill Lynch (BAML), Bradesco, BTG Pactual, Itau and JPMorgan to lead an international bond transaction, according to one of the mandated banks. Size and currency have yet to be determined though a global BRL is one option being considered. The Brazilian toll road operator was heard sounding out the US buyside via BAML early August. CCR AutoBan is a subsidiary of Companhia de Concessoes Rodoviarias (CCR), an infrastructure company that is involved in highway concession, passenger transportation and the environmental vehicular inspection sectors. CCR and its subsidiaries have yet to issue in the dollar markets, according to Dealogic data, though are frequent domestic issuers.

Brazilian retail chain Lojas Americanas has closed a BRL500m ($292m) domestic bond, according to Anbima. The BRL500m 7-year pays 113% of the DI rate, and amortizes in 3 equal parts in years 5, 6 and 7. Americanas is raising funds to replace debt due this year. Banco do Brasil managed the sale, done under the rule 476 restricted format. Last week, the retailer agreed to sell BRL293m in 2017 convertible debentures to government development bank BNDES. The bonds to be purchased by the bank’s BNDESPar unit pay a fixed rate of 13.15%, and are convertible at a BRL19.25 per share price at any time.