Brazil High Yield Prays For Liquidity

Brazilian high-yield issuers are hoping for a liquid September, having left planned deals on the tale this spring. Food producer Camil held its debut $150m million medium-term issue, and developers Cyrela and BRMalls decided to hold off after July roadshows. Oil parts supplier Lupatech is heard aiming for a new 10-year issue, after its 9.875% perpetual retap was cut back to $75m in June, with Credit Suisse and JPMorgan heard getting the mandate. Telemar is aiming for up to $1.5bn to complete its Brasil Telecom acquisition. Brazilian builder Camargo Correa is eyeing $400m-$500m for potential M&A, according to ABN AMRO. The main question is whether demand will be there. “Mid-year there was cash on the sidelines,” says Dario Pedrajo, who manages $100m in Latin American debt at Kapax Investment Advisers. “Right now the market’s pretty tight.” Competition will come from cheap Russian corporates, Chinese real estate, and even struggling US high-yield. One bright spot, he says, should be demand for Brazil mid-tier names that kept the DCM trickle going this spring and early summer. Cruzeiro do Sul pulled a $100m deal in July, and BCP securities, co-bookrunner on the deal with UBS, claims to have other mid-tier banks in the pipeline. Panamericano is another interested in a $100m or more in the 2-3-year range, after testing the waters this spring. Even if there is appetite, Brazilians still have the option of the local market, which has still seen strong activity in the last two months. Rental car provider Localiza, after approving $500m in debt, has already opted to place more than half domestically.