Category: Brazil

The board of Brazilian car rental agency Localiza has authorized management to raise up to BRL600m through debentures. The issuance will be divided into two series of up to BRL300m each. Localiza did not provide further financial details or an indication of timing. In June, its board authorized raising up to $500m in the international or domestic markets. Last week, Localiza IR director Silvio Guerra told LatinFinance that debt was a better option than equity, given that the company is just 1.3x levered.

Brazilian development bank BNDES has approved a BRL128m 12-year loan for BBE-Brasil Bioenergia. The renewables developer will pay TJLP plus 3.44%. Proceeds fund 80% of a BRL160m plant to extract vegetable oil from soybeans and produce biodiesel in the state of Mato Grosso do Sul.

Brazilian meatpacker Bertin has agreed to buy peer Cooperativa Rondoniense de Carne for BRL55m. The purchase of the producer located in the Amazon region is still subject to approval by regulators and the companies’ boards. The move is the latest in a round of international and domestic consolidation among Brazilian beef companies.

Brazilian development bank BNDES has invested BRL32.5bn in infrastructure in the 12 months to June 30, up 80% from the corresponding period one year earlier. The bank lent a total of BRL78.8bn across all sectors in the 12-month period, representing an increase of 34% and reaching a new record. The BRL22bn that went to the land transportation and electric power sectors was 68% of infrastructure-destined funds, by far the largest class in that group. BNDES also notes that financings linked to domestic market investments rose 23%.

Moody’s has downgraded all debt ratings of Brazilian airline Gol to B1 from Ba3 and all ratings were placed under review for possible further downgrade. The action comes after the airline’s announcement of cuts in its fleet and eliminating dividend payments. The rating downgrade reflects continued deterioration in the financial strength of Gol and prospects for a further decline in the financial metrics barring significant improvement in the company’s cost structure, the agency says. Although the company has eliminated most international routes of its troubled subsidiary Varig, Gol’s unit costs have increased due to challenges of realigning its operations. “Gol has several planned initiatives to increase revenues by increasing sales to customers through its installment-purchase plan and increasing cargo and ancillary revenues,” Moody’s says. “However, these efforts to boost sales are unlikely to offset incremental costs, primarily fuel related,” the agency adds. Without a decline in fuel costs, these actions may not be sufficient to allow the company to improve levels of profitability and cashflow generation to levels consistent with the B1 rating, Moody’s states.

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.