Category: Brazil

Steel processor ArcelorMittal has announced investment of $1.6bn in long carbon steel operations in Brazil. The spend, which include the construction of three new furnaces and several mills, is in addition to $1.2bn of investment previously announced for expansion of the Monlevade plant in Minas Gerais state. The final location for the new investments will be announced after the conclusion of feasibility studies which are presently underway, the company adds.

LatAm equipment leasing activity is growing quickly, especially in Brazil, according to a new report by The Alta Group, a global consultancy serving leasing and finance companies. However, Alta warns that Brazil’s heady growth is likely to slow in 2008-2009 due to a number of factors, including a preponderance of motor vehicle leases in portfolios. The group’s latest report on the sector shows LatAm equipment leasing increasing by 81% in US dollars, or 71% adjusted for currency volatility, overall in 2007. “Brazil’s equipment leasing industry, which represents close to 60% of the total leasing portfolios in Latin America, outpaced all other countries and expanded by nearly 105%,” says Alta, which cites sound regulation for the country’s success. It adds that a large percentage of leasing portfolios is concentrated in motor vehicles, a market that appears to be reaching saturation. Brazil’s longer term growth is buoyed by a well developed agricultural industry and potential to increase leased assets for agricultural equipment, construction equipment for infrastructure projects and technology. Elsewhere, Venezuela was up 72% in 2007, boosted by liquidity, while Costa Rica jumped nearly 95% in 2007, says Alta. Equipment leasing gains generally correlate with increased capital investment and the expansion of wealth, says the group.

Brazilian vehicle rental provider Unidas has launched the sale of BRL250m in 2012 debentures. The bonds are a debut in the Brazilian debenture market and pay DI plus 2.75%. Proceeds from the deal, rated A on a national scale, will repay maturing short-term debt and fund the purchase of new vehicles. Itau is managing the transaction, with UBS, HSBC, Banif and Banco ABC as co-managers.

The board of Brazilian natural gas distributor Comgas has approved the sale of BRL100m in 2014 debentures. The notes will pay the DI rate plus 1.5%. Comgas has not yet indicated how it plans to use proceeds from the operation, which still must be approved by regulators. Bradesco is managing the transaction.

The board of Brazilian steelmaker CSN has approved the buyback of up to 10.8m shares until August 27. It does not indicate how it would fund the repurchase, which could cost more than BRL600m. CSN has 455.3m shares outstanding, which closed Monday at BRL56.30. UBS, Credit Suisse and Itau are the intermediaries on the repurchase.

Brazilian developer Trisul’s has completed the sale of BRL200m in 2013 debentures, its first issue in that market. The notes, rated A on a national scale, pay DI plus 2.5%. The developer, formed from the merger of real estate companies Tricury and Incosul, plans to use proceeds to acquire new property and for working capital. Bradesco managed the transaction, with Banco ABC, HSBC, Banif, Banco Votorantim, Unibanco and Sofisa as co-managers.

South African miner AngloGold Ashanti says it will purchase Sao Bento Gold, owner of Brazilian mining company São Bento Mineracao, for $70m. The transaction will be settled by the issue of AngloGold shares to Sao Bento’s current owner, Eldorado Gold, AngloGold says. Sao Bento controls a Brazilian gold operation close to AngloGold’s proposed Corrego do Sitio mine, in the state of Minas Gerais.

Brazilian oil and gas startup OGX, which went public in June, has chosen Houston-based Diamond Offshore Drilling to lease 2 existing offshore drilling rigs. The semi-submersible rigs, called Ocean Ambassador and Ocean Lexington, will each be chartered for 3 years. OGX has been in discussion with Queiroz Galvao for a similar deal, but terminated talks on reaching agreement with Diamond. OGX says it is looking to contract up to two additional ships, and that exploration of the offshore blocks it won in a December government auction will begin in H2 2009. The charter will be financed with OGX’s own resources from its $3.4bn IPO in June. The stock is down 32% since launch, closing at BRL770 Friday.

Brazil’s Parana Banco has closed books on a $35m bond issue, an offer that had originally been set for $100m and was cut to $50m mid-July. The 2010 notes with a 7.750% coupon priced at 99.717 to yield 7.875%, in line with guidance given at the conclusion of a June roadshow. Amid increasingly challenging market conditions, demand reached only $35m, with a few orders still coming in after books closed, according to an official familiar with the transaction. Subscription came mostly from European institutional investors. Queluz Securities managed the sale.

JBS has launched a consent solicitation to modify indentures on $275m in 9.375% of 2011 bonds and $300m in 10.50% of 2016 bonds. The Brazilian beef producer is paying $25 per $1,000 to holders of the 2011 and $40 per $1,000 to holders of 2016s, in an offer launched Friday that expires August 13. JBS has become the world’s largest beef exporter through international acquisitions and the offer is part of a move to reorganize the debt structure to better suit incorporation of international assets. ING, Santander and UBS are managing the operation.