Gerdau Approves New Loan

The board of Brazil’s Gerdau has agreed to provide collateral backing for a new $150m 6-year loan facility from Bradesco to be raised by its subsidiary Gerdau Acominas. The deal is apparently secured by assets, though the company does not specify what kind of collateral is being used. The new facility is being used to take out shorter term and maturing debt, a Gerdau official tells LatinFinance, declining to elaborate. A Brazilian syndications official away from the deal estimates pricing on such a facility could reach up to 500bp over Libor given the tenor, but notes that terms and conditions are unknown. Gerdau is in the midst of renegotiating covenants on a series of syndicated facilities raised with international banks. The company is seeking to increase the gross debt to Ebitda ratio cap to 5x from 4x as the steel sector enters a slump and the company’s M&A debt begins to weigh on credit metrics.