Rotting Meat: Brazil Beef Slips into Distress

In what may reflect overly aggressive leverage-based growth strategies, the bonds of 6 Brazilian beef companies have slipped into distressed trading territory. Bids on notes from Bertin (10.25% of 2016) Arantes (10.25% of 2013), JBS-Friboi (10.5% of 2016), Independencia (9.875% of 2017), Marfrig (9.625% of 2016) and Minerva (9.5% of 2017) were between 42 and 47 as of Friday, according to Credit Suisse. All were above 50 the week before. JBS, the most aggressive acquirer, could actually see its debt picture improve, according to Bradesco, if the US government succeeds in blocking one of its two most recent acquisitions, thereby freeing up some $450m in cash. As Argentina’s woes pile up, issues from Alto Palermo, Banco Macro, Impsa, IRSA, TGN, TGS and Transener have all seen bids drop to the 30s and 40s, from above the 50 mark just a week earlier. Meanwhile in Mexico, tortilla maker Gruma has seen bids on its 7.75% perpetual drop to 50 from 98 one week earlier, after being chopped to junk following heavy mark-to-market derivative losses.