Bradespar Rolls Out High Yield Bonds

Bradespar has started the sale of BRL610m in 36-month debentures and BRL690m in 180-day promissory notes. The debenture issue is the first Brazilian local market issue with a tenor of more than one year since the liquidity crunch and surprises with what market participants say is an exceptionally high 125% of the DI rate. The interest rate – 125% of DI – marks a high point for investors, with higher yield issues in the latter part of 2008 reaching 110%-115%. The shorter-dated promissory notes, which even the biggest Brazilian borrowers have been relying on since September, pay 110%. Bradesco and UBS are managing both sales. Demand for the deal has apparently surpassed BRL6bn, according to a report from newspaper Valor Economico, which cites market sources. The debentures are rated AA on a national scale. The equity arm of Banco Bradesco is refinancing most of the BRL1.4bn in that it borrowed last year to finance the purchase of a stake in miner Vale. Bradespar owns 5.6% of Vale through its participation in the Valepar investor group. October saw the last term issue from this market, a placement by water utility Sabesp of BRL220m in 2013 and 2015 notes.