Category: Brazil

Santander’s Brazilian unit Banespa has sold $300m in 2014 bonds backed by electronic payment rights. The issue for Brazil Foreign Diversified Payment Rights Finance is a securitization through a true sale of Santander’s current and future diversified payment rights (DPRs). The A minus transaction was privately placed at a floating rate. The bank did not disclose the interest rate it paid. In May, Santander sold $190m in 2015 DPR notes from the same program at a fixed spread.

Brazil’s Sabesp plans to sell BRL300m split between 2013 and 2015 debentures. It will set the amount of each series and the interest spread over the DI rate during bookbuilding, the water utility says in a prospectus. Proceeds will pay maturing debentures and debt from the IDB. HSBC will manage the transaction with Citi, Caixa Economica Federal and Banco do Brasil as co-managers.

Geracao Paranapanema plans to begin a roadshow Wednesday in support of its BRL300m in 2013 and 2015 debentures issue. The Brazilian unit of Duke Energy International will meet investors through September 9, and plans to define the amount to go into each tranche during the bookbuilding process. Parapanema is proposing to pay DI plus 2.15% for the 2013 bonds and a rate linked to Brazil’s ICPA inflation rate on 2015s. Citi and Itau are managing the transaction, rated Aa3 on a national scale by Moody’s.

Brazilian high-yield issuers are hoping for a liquid September, having left planned deals on the tale this spring. Food producer Camil held its debut $150m million medium-term issue, and developers Cyrela and BRMalls decided to hold off after July roadshows. Oil parts supplier Lupatech is heard aiming for a new 10-year issue, after its 9.875% perpetual retap was cut back to $75m in June, with Credit Suisse and JPMorgan heard getting the mandate. Telemar is aiming for up to $1.5bn to complete its Brasil Telecom acquisition. Brazilian builder Camargo Correa is eyeing $400m-$500m for potential M&A, according to ABN AMRO. The main question is whether demand will be there. “Mid-year there was cash on the sidelines,” says Dario Pedrajo, who manages $100m in Latin American debt at Kapax Investment Advisers. “Right now the market’s pretty tight.” Competition will come from cheap Russian corporates, Chinese real estate, and even struggling US high-yield. One bright spot, he says, should be demand for Brazil mid-tier names that kept the DCM trickle going this spring and early summer. Cruzeiro do Sul pulled a $100m deal in July, and BCP securities, co-bookrunner on the deal with UBS, claims to have other mid-tier banks in the pipeline. Panamericano is another interested in a $100m or more in the 2-3-year range, after testing the waters this spring. Even if there is appetite, Brazilians still have the option of the local market, which has still seen strong activity in the last two months. Rental car provider Localiza, after approving $500m in debt, has already opted to place more than half domestically.

Brazil’s treasury has revised its 2008 borrowing plan, adjusting the caps on total debt stock as well as the proportions of fixed and floating-rate debt. Fixed-rate debt will be targeted at 29%-32%, down from 35%-40%, while floating-rate will shift up to 31%-34%, from 25%-30%. Inflation linked debt will meanwhile stay the same at 25%-29%. As of end-2007, Brazil had 35.1% in fixed rate, 24.1% inflation linked and 30.7% floating rate debt, the treasury says. The total debt stock limit has been cut to BRL1.36trn-BRL1.42trn, down from BRL1.48trn-BRL1.54trn, and versus BRL1.33trn at the end of 2007. It moved the targets due to the strengthening of Brazilian economic indicators amid increasing international instability, it said.