Category: Brazil

Brazil’s Cosan plans to raise BRL880m through a share offer to existing shareholders, it says, and obtain $800m in credit facilities from Bradesco. The share subscription funds will be used for expansion plans, CFO Paulo Diniz says on a call with investors. The credit facilities can be tapped if needed to help finance last year’s purchase of Esso assets in Brazil. Diniz says the sugar and ethanol producer is taking action because Cosan “may have some delays to get permanent financing” given the state of the markets. The Cosan SA unit will issue 55m common shares available to current holders until October 22. The Cosan Ltd unit, the majority holder in Cosan SA, will buy any shares remaining after the subscription period. The credit package consists of a $500m standby facility from Bradesco and a $300m pre-export credit facility. Cosan SA shares closed at BRL15.50 Monday, down from a previous close of BRL16.22.

Brazilian miner Paranapanema has agreed to sell its 100% stake in Mineracao Taboca to Serra da Medeira Participacoes, a unit of Peruvian miner Minsur, for BRL850m. The offloading of the asset is part of a reorganization of Paranapanema finances. In August, Paranapanema sold BRL920m in 2010 and 2019 convertible bonds as part of a 2006 asset restructuring agreement with creditors, in which it needed to sell convertibles or shares this year. Taboca operates an open-pit mine in the Amazon region extracting tin, iron and other metals. Earlier this year, Vale had been rumored to be considering the acquisition of Paranapanema’s Caraiba and Cibrafertil units.

Even Construtora e Incoporadora plans to raise BRL150m through a private subscription of 37.5m shares, it says. Shareholders will vote on the idea October 7. The builder raised BRL460m in an IPO last year. This year it has resorted to a BRL475m 5.5-year credit from Itau and BRL100m in 2012 debentures in the spring.

Several US REITs are looking at Brazil, some for the first time, as paltry returns at home lead them to seek greener pastures. First timers like Weingarten Realty, based in Houston, are heading to Sao Paulo and partnering up with locals to develop commercial properties, including malls and industrial facilities. Also rumored among new arrivals are Simon Properties, General Growth Properties and Duke Realty. “The development opportunities in the US are extremely limited for a couple for reasons,” says John Blumberg, founding partner of Black Creek Capital, a holding company with a number of US REITs and Mexican housing vehicles worth some $6.3bn. Blumberg is looking to raise a fund for Brazil. Among the established players are AMB, which has set up a JV with Cyrela Commercial Properties, and Kimco Realty, in partnership with local developer REP to build outdoor mall areas in suburban regions. Prologis, one of the largest REITs specializing in logistics centers and facilities, also has a small but growing portfolio of real estate assets in Brazil. The risk for all new arrivals is similar to those faced by seasoned locals. However, beyond cultural and language barriers, lack of familiarity with local tax and licensing policy can lead to unexpected delays and costs, say Brazilian developers.

BNDES is not planning another debt issue in the international markets, a spokesman tells LatinFinance, despite reports in the Brazilian press that it had cancelled a scheduled bond sale. The Brazilian development bank sold $1bn in 2018 notes in May to refinance a 1998 issue. In July it postponed a planned BRL1.5bn 2010 debenture issue targeted at local markets.

Brazilian hedge fund Maua posted improved monthly figures in August, taking a very small, but much needed step towards recovery following a devastating first half. Its Maua Brasil Fund, a macro multi-strategy vehicle, was up 0.47%, above the 0.31% in July, though still below its 1.05% 2007 total return. The Maua Brasil Plus fund, focused on fixed income, rose 0.93%, topping its minus 1.52% 2007 average and the minus 14.46% 2008 average. Its Maua Brasil Equities fund was down 8.23%, better than July’s negative 9.35% and the minus 10.55% returned by the Bovespa in August. “At the margin we are buyers of stocks in Brazil,” say the fund’s managers in a letter to investors. They add that recent declines in share prices have led to a move away from a net negative position in equity. Maua has experienced substantial redemptions in 2008 and saw assets under management at its Maua Brasil fund fall to BRL277m last month from BRL1.3bn in August 2007.

Unibanco, which has a 52% stake in the Brazilian insurance joint venture Unibanco AIG, is looking at potentially buying AIG’s 48%. The unit’s president Jose Rudge, suggested on a conference call late Tuesday that Unibanco has the first right of refusal if the stake goes up for grabs. “We are very attuned to opportunities that may arise from this and would analyze the opportunity to buy if it were for sale,” says Rudge, adding that this would be a natural step for Unibanco. He declines to comment on whether AIG had offered to sell, or if Unibanco is in direct acquisition talks. Unibanco AIG Seguros e Previdencia had BRL12bn in assets for the fiscal year 2007 and posted revenues of BRL5.6bn during the period. Rudge was not available for additional comment.

Brazil and Chile could see their Moody’s ratings upgraded by the end or 2009, according to Credit Suisse, while Venezuela could be in line for a downgrade. The shop analyzes macro forecasts for 27 EM countries, using Moody’s and its own data. When using its own numbers, the model finds that Brazil’s Ba1 and Chile’s A2 would be raised a notch, while Venezuela’s B2 could be lowered a notch. When using Moody’s data, it finds the only change is the Brazil upgrade. Moody’s is the only one of the three major ratings agencies not to rate Brazil high-grade, keeping it one notch lower.

Barclays could end up with the beginnings of an investment banking unit in Brazil if it succeeds in acquiring parts of Lehman. Reuters reports late Tuesday that Barclays has agreed to buy Lehman’s main investment banking assets for about $2bn, citing an unnamed source. According to the Wall Street Journal, Barcap wants to acquire the equity and debt underwriting, M&A and securities trading units. It is unclear what the deal would involve, but Brazil-based bankers speculate that Barclays might establish a local beachhead via an acquisition. Lehman had begun building a structured products team focused on Brazilian fixed income, and it was slowly establishing a name in Sao Paulo, where it opened an office in 2007. The US bank hired Alex Maya, formerly of Morgan Stanley, and Rio Bravo’s founder – veteran senior banker Winston Fritsch – to head the new branch. It was working on adding cross border M&A and financing went the head office went belly up. Barclays meanwhile had been hoping that an acquisition of ABN AMRO – which failed – would beef up its local LatAm investment banking capabilities. Barcap declined to comment.

Brazilian car-rental agency Localiza started a roadshow yesterday for a BRL300m 2012 local bond issue. The rate will be set during bookbuilding, which is expected to conclude September 30. Proceeds from the transaction rated Aa2 on a national scale will expand Localiza’s fleet. Unibanco is managing. The issue follows a recent sale of BRL300m in 2011 bonds at DI plus 1.80% via Bradesco.