Category: Brazil

Bradespar plans to issue BRL690m in 180-day promissory notes at 113% of the DI rate, it says. The equity arm of Bradesco, which holds stakes in companies including Vale and CPFL Energia, will use proceeds to repay BRL1.4bn in 180-day promissory notes issued in June at 106% of DI. It had originally aimed to issue 3-year debentures to cover the short-term debt. Bradesco, UBS and Espirito Santo are managing the transaction.

Brazil’s BNDES development bank has approved a BRL2bn 5-year credit line for electricity holdco Neoenergia. Funds drawn will pay a spread over TJLP and support a 2008-2012 investment program at regional utilities Cosern, Coelba and Companhia Energetica do Ceara. Neoenergia is a subsidiary of Spain’s Iberdrola.

The World Bank has approved a $120m loan to the Brazilian state of Acre to help provide basic services and promote development based on the state’s natural resource base. The 28-year loan is guaranteed by the government of Brazil and has a 7-year grace period. Acre has the third smallest economy among Brazil’s states, based on extractive and forestry activities. Its per capita income of $2,810 is the 10th lowest in the country. Despite significant recent improvements, many of the state’s social and economic indicators are well below Amazon and Brazilian averages, says the Bank.

Moody’s has put Brazil’s Rede Energia on review for possible downgrade. The agency says it is concerned about the company’s ability to refinance short-term debt and a capex program in a timely manner given adverse conditions in capital markets. Long term, says Moody’s, it appears that further equity capitalization will be critical, given the group’s increased leverage and higher cost of capital. The ratings placed on review are the B2 global scale and Ba1.br national scale corporate family ratings and the B3 global scale rating on Rede’s $575m perpetuals.

Usiminas has agreed to acquire steel pipe manufacturer Zamprogna for BRL160m. The deal is expected to close in February. As of September 30, Zamprogna’s working capital added up to BRL245m and consolidated debt was BRL405m. Financial advisors and financing terms were not disclosed and company officials did not return calls for comment.

Brazilian mobile phone company Vivo Participacoes is planning an issue of BRL210m in non-convertible 1-year debentures. The deal will price at 113.55% of DI and mature January 11 2010, according to a company statement.

UBS has upgraded Brazil’s Gol equity to a buy following a broadly bullish review of the LatAm airline sector. Copa is the shop’s top pick and it also maintains buy recommendations on Lan and Tam. The Copa price target was upped 8% to $42, Gol’s 13% to BRL13, while Lan’s target was held at $12 and Tam’s fell 8% to BRL34. “We continue to believe earnings for the LatAm airline group will prove fairly resilient in 2009,” says UBS. “We are revising our estimates for the LatAm airline space, incorporating more bearish revenue assumptions and lower oil prices,” it adds. UBS says the positive impact of lower oil prices far outweighs the potential negative implications of weaker demand on revenues. It also expects earnings to grow from the 2008 base, which makes the sector compelling considering the general global economic outlook.

Brazil’s Banco Mercantil has repurchased $23.451m of the up to $100m face value of its 8.5% of 2010 bonds that it was targeting through modified Dutch auction. The deal came at 85, the minimum price set at the auction which closed this week, and fell slightly short of 30% participation expectations. “A lot of people didn’t want to sell, they like the bank,” says a banker close to the trade, adding that much of the paper was in retail hands. The bonds were trading 78-83 before the buyback was announced last week and the company is funding the deal with cash on hand. UBS is dealer manager. There was $175m outstanding before the repurchase.

South Africa’s AngloGold Ashanti has purchased Sao Bento Gold in Brazil from Eldorado Gold for $70m. The buyer issued some 2.7m shares to pay for the target. The legal advisors for the buyer are Fasken Martineau and Shearman & Sterling. Sources close to buyer and seller said there were no financial advisors on either side.

Brazil’s Banco Mercantil is buying back up to $100m in face value of its 8.5% of 2010 bonds through a modified Dutch auction. The minimum price is 85 and the auction expires today. The bonds were trading 78-83 before the buyback was announced last week and the company is funding the deal with cash on hand, according to a banker on the transaction. UBS is dealer manager.