Category: Brazil

Brazilian credit card company Redecard is due to price a follow-on of secondary shares today. A pricing call will be held at 5:00pm to determine the level at which 40.7m shares belonging to Citi will be sold, says a person on the deal. The sale represents a quarter of the bank’s holding in Redecard. Unibanco and Itau also own similarly sized stakes but have opted not to sell at this juncture. Redecard shares closed at BRL25.80 Tuesday, a 3.3% rise versus Monday’s close. That last minute lift following three sessions of decline will boost Citi’s proceeds today. If it is executed at BRL25.80, the sale would raise BRL1.05bn. Citi, Unibanco and Itau BBA are leading.

Brazilian toll-road operator Companhia de Concessoes Rodoviarias (CCR) has made the lowest bid for the rights to operate the western portion of Sao Paulo’s Rodoanel Mario Covas ring road, it says, making it the likely winner. CCR and partner Encalso Construcoes have offered to charge a toll of BRL1.17, below runner up Brivas’ BRL1.26, and well below the BRL3.00 maximum. The company must make an up-front payment of BRL200m, according to Brazilian media reports of a conference call CCR held yesterday. This it will fund with a BRL600m bridge arranged by UBS Pactual. CCR expects to spend about BRL150m in each of the first two years, according to Itau, and will replace the bridge with a 10-year bullet, expected to be priced at Libor plus 250bp. CCR has not ruled out other sources of funding, and says it is in advanced negotiations with pension funds regarding equity investment.

Brazil’s Banco BMG has sold $250m in 2010 6.875% bonds priced to yield 7%, upsizing from a planned $100m. Demand reached about $375m, Ricardo Gelbau, the bank’s finance director tells LatinFinance. “A combination of the excellent fundamentals in Brazil, the attractive financial story of BMG, and the fact that we came out with 2-year notes,” were key to pulling off the deal in the current credit market, he says. “The market doesn’t want long-term assets.” A “sizeable portion” of the almost 70 investors came in at a “pre-sale” price offering a discount of one-eighth, he explains, declining to elaborate. Just over half the investors came from North America, with 23% European and 18% from LatAm. BCP led the Ba1 rated transaction, which closed late Friday.

Brazilian electric company Energisa has registered to sell BRL150m in 2014 debentures. The bonds will pay 110bp over DI. Citi is managing the sale, which awaits regulatory approval.

Brazilian meatpacker Marfrig has entered the poultry business, acquiring producers DaGranja and Pena Branca in separate transactions totaling $110m. Marfrig agreed to pay $58m for DaGranja, and $53m for Pena Branca. Marfrig will be one of the five largest poultry producers in Brazil, says Itau, adding the move “makes perfect sense,” based on reduction in sanitary risk, leveraging of the distribution chain, and reduction in the risk of commercial barriers.”

Brazil’s Itau will manage the sale of up to BRL4bn in shares of Gerdau and its Gerdau Metalurgica subsidiary, Gerdau said in a filing. The steelmaker plans a BRL2.8bn primary share offering for itself and a BRL1.2bn primary offering for Gerdau Metalurgica. Gerdau says proceeds will be used reduce leverage, and possibly go towards future projects or acquisitions.

Duke Energy’s Geracao Paranapanema plans to sell up to BRL750m in 2014 and 2016 debentures, reviving a sale that it had temporarily postponed in January due to market volatility. It plans to begin presentations to investors Tuesday and start bookbuilding March 28. Moody’s has given the deal an A1 local rating. Citi is leading the transaction, with Itau as co-manager.

Brazilian mid-sized bank BMG plans to begin today bookbuilding on $100m in 2010 bonds. The books will be open for one week. The 7.000% coupon deal will price to yield 7.125% for orders of more than $1m and 7.250% for $3m tickets. BCP is managing the sale, which closes March 13 .

Brazil’s central bank unanimously decided to kept the Selic rate unchanged at 11.25% Wednesday, with no bias, according to the banks’ website. The decision is supported by current macroeconomic indicators and the inflation forecast, says the bank.

While the outlook for the Brazilian homebuilding sector has never been stronger, there are still several risks investors should keep in mind, says Moody’s. Strong fundamental improvements for the sector including stable inflation, a clearer regulatory environment, rising incomes and surging growth in credit, bolstering the leading players in Brazil. But access to cash and capital market financing remains paramount for these businesses, and is less than a given considering today’s market conditions, says Moody’s. The sector is also fragmented and highly competitive, which adds stress to companies with a less established presence. Accounting practices could still be improved and the ability to ease financing constraints through partnerships with banks will be considered when evaluating credit quality, says the agency.