Category: Brazil

AmBev has approved a BRL750m 1-year share buyback program. The repurchases will not exceed a threshold of 10% of either common or preferred shares held in the company’s treasury. It also has concluded a BRL500m buyback announced in December, reaching 96.4% of targeted volume. AmBev has 33.0m common and 143.9m preferred shares outstanding.

Brazil’s Petrobras confirmed on Monday that it is studying buying Exxon’s Brazilian assets. The company is considering bidding on distribution assets belonging to Esso, the name under which Exxon operates in Brazil. Press reports last week suggested the assets might be worth between BRL1.2bn-BRL1.5bn, though earlier in the month, analysts suspected they might be bid up to as much as BRL1.7bn. Sugar and ethanol producer Cosan, as well as private equity investors GP Investments and Ashmore Group are also heard circling the Esso assets. Exxon left Venezuela last year and is understood to be relinquishing its remaining assets in Brazil, Uruguay, Paraguay, Argentina and Chile.

Markets expect the Brazilian central bank to leave the Selic unchanged at 11.25% at this week’s meeting. The balance of risks has improved since the last meeting in January and consumer prices have receded from the December and January hikes, says Citi, adding that the international scenario has not yet affected the domestic economy. “Economic activity growth remains a risk to this outcome, but given the lack of official figures regarding the first quarter activity, we expect the central bank to continue monitoring incoming information, rather than take any action at this time,” the house says.

Brazil’s Banco BMG is preparing an offering of at least $100m in 2010 notes. The mid-sized bank specializing in payroll credit expects to launch the sale Thursday and close books a week later. BMG is offering investors a fixed coupon of 7%, and will price to yield 7.125% for orders of $1m or more and 7.25% on orders of $3m or bigger. BCP Securities, which led a $100m 18-month bond transaction for fellow Brazilian Banco Cruzeiro do Sul last month, is managing the sale.

Brazilian steelmaker Usiminas has started a BRL500m 2013 debenture sale after receiving regulatory approval. The bonds have an AA+ local rating and pay 42p over DI. The operation, part of a BRL2bn program, contributes to the financing of the company’s investment plans through 2012. Bradesco and Banco do Brasil are managing the sale.

Brazilian steelmaker Gerdau plans to file for a BRL2.8bn primary share offering for itself and a BRL1.2bn primary offering for subsidiary Gerdau Metalurgica. Following board approval yesterday, Gerdau said it expects to request regulatory approval today. It took out a $2.75bn loan and sold $1bn in bonds last year to help fund its US unit’s $4.22bn acquisition of Chapparal Steel.

Brazil’s Companhia Energetica do Maranhao has secured an 8-year loan from the IFC for BRL135m at an undisclosed spread. Proceeds will help the distributor, owned by Equatorial Energia and Electrobras, fund a 2007-2009 capital expenditure plan that aims to upgrade the distribution network.

Brazil’s GVT Holdings priced a follow-on offering of secondary shares late last week, netting $167m. The deal through Credit Suisse involved the sale of 7.5m shares at BRL37.50, a 4% discount to the BRL39.00 closing price. It was not marketed and there was no official documentation. Investors in the deal include Swarth Management, which bought 980,000 shares, and Swarth Investment, which purchased 1.57m units. GVT Holland, a Netherlands-based vehicle likely belonging to the company itself, bought the bulk of the offering, or 4.45m shares, according to Dealogic. On such trades, investors are called privately by the company and informed of the auction to take place the following day on the Bovespa. Buyers place bids before pricing.

Easier access to finance is needed for energy efficiency programs in Brazil, according to the World Bank. “Brazil is a challenging place to do energy efficiency projects,” says Todd Johnson, a World Bank energy specialist focused on Brazil. “Interest rates are high. It’s difficult to borrow. Banks now are not lending for energy efficiency, they’re focused on the tried and true lines of business.” Other EMs like India and China has easier access to finance for this type of projects, Johnson adds. Brazil funds its energy efficiency programs through a wire charge that has provided between 1.0% and 0.5% of annual distribution utility revenues for energy conservation since the late 1990s. But it leaves energy efficiency projects to the discretion of utilities. “Brazil could improve the wire charge fund by monitoring results of projects more closely and offering new incentives to save energy,” says Johnson.

The gulf appears to have widened between Brazilian mining giant Vale and Swiss-based Xstrata over a takeover that could cost up to $95bn. The pair were heard yesterday to be back at the negotiating table. A person close to the process says they reached a near impasse in recent days over the commodity marketing rights that Glencore, Xstrata’s main shareholder with 35% of the company, demands. Press reports Thursday suggest the deal nearly almost apart over the disagreement. “Discussions are still going on,” says the person familiar with the merger, adding that there are other challenges issues besides the rights, not least the absolute price. Vale began its bid for Xstrata over a month ago and has made an offer worth $85bn for the company, after lining up $50bn in funding. Vale’s proposal was strengthened by a series of price adjustments it secured recently with Asian steel producers. But Glencore – which turned Xstrata into a global commodities powerhouse in less than six years – has proven a savvy negotiator, making Vale’s bold takeover attempt a difficult and increasingly expensive proposition. The fact that Glencore is selling at all suggests to some analysts that an acquisition might end up being a huge and costly flop for the Brazilian firm.