CSN Goes Back on Tour

Brazil’s Companhia Siderurgica Nacional (CSN) plans to begin a roadshow in London Tuesday in support of a benchmark-sized bond issue. The rating agencies expect a 10-year bond of up to $750m, they say in reports assigning BB+ (S&P), BBB minus (Fitch) and Ba1 (Moody’s) ratings to the deal. The split-rated steelmaker will travel to New York September 10, Boston September 11 and finish in LA September 14. Itau and Morgan Stanley are managing the 144a/Reg S CSN transaction, done through the Islands XI special purpose vehicle created for the issue. CSN’s 2015 are trading to yield 5.75%-6.00% range says an investor, while a more liquid 2017 from fellow Ba1/BBB minus Brazilian steelmaker Gerdau traded in the low 6%s Tuesday. CSN’s last cross-border bond was a $750m 9.5% NC5 perpetual sold in July 2005 through Credit Suisse and Deutsche Bank. It nixed a 30-year late in 2006. CSN aims to be among the first Brazilian corporates out of the gate in what should be a busy fall issuance spree. Likely issuers include Banco do Brasil, Grupo Votorantim and Cemig. Juicy yields characterized the frothy June through August market, marked by hefty oversubscription and sharp aftermarket rallies. The big question for borrowers and their bankers is how far they can squeeze price. “There should be some overall spread compression, but it’s difficult to say how much,” says a New York-based DCM banker, noting that yield will depend on individual borrowers.