Telemar Aims Under 10%

Telemar has issued guidance of 9.75%-10.00% yield on an upcoming issue of $750m in 2019 bonds, expected to price this week. The BBB minus/Baa3 rated deal has been roadshowing in the US and Europe. In September, the issuer tried to achieve 8.50% area yield on 10-year notes, part of a $1.5bn offer of 5 and 10-year notes that was pulled amid market volatility. Investors say spreads have widened about 150bp-200bp since then. Proceeds will go towards refinancing debt from last year’s acquisition of Brasil Telecom. Telemar has BRL3.6bn in 1-year bridge due in July. It is followed by a BRL2bn facility due in December that it opted to take out after aborting the September cross-border sale plan. In the local market, Telemar is selling up to BRL3bn in debentures, including 2011s and 2012s, paying DI plus 115% and 120%, respectively, also to retire debt. Citi (on the left), Banco do Brasil, Bradesco, Itau and Santander are managing the overseas sale. The issue is set to be the second from a true Brazilian corporate this year, following Odebrecht’s $200m offer last week, which traded up.