Brazilian Telecom Wants All BRL Warchest

Telemar, whose Oi unit is buying Brasil Telecom (BT) for an estimated total consideration of BRL16bn, is eyeing the loan market for acquisition financing, which it wants all in local currency, say executives close to the process. The desire may be wishful thinking on the part of the telecom giant, says a veteran LatAm loans banker considering participating, whose team estimates up to BRL10bn-BRL12bn could be done in local currency. Whether it is the full amount, or less than two thirds, a BRL-denominated facility of that size would set a new precedent for domestic currency lending in terms of size. The fact that many of Telemar’s relationship banks on the facility do not have natural BRL funding bases would lead them to seek funds in the FX swap market. A list of participants is still forthcoming, but a mix of local, European and US banks are heard involved at senior levels. Credit Suisse and Morgan Stanley advised the buyer, while Citi advised the seller in the Oi-BT M&A.