Odebrecht Joins Brazil Bond Party

Investor desire for Brazilian risk shows no sign of cooling, as Odebrecht Finance sold Wednesday $500m in 10-year bonds, upsized from $300m on the back of more than $2bn in demand. The Brazilian builder’s funding arm followed the previous session’s heavily oversubscribed jumbo perp from Banco do Brasil with a 2020 NC5 priced at 98.184 with a 7.000% coupon to yield 7.250%, or UST plus 382.3bp, the tight end of 7.250%-7.375% yield guidance. The issue was heard trading up 1.00-1.25 points in the gray Wednesday afternoon. Investors note a positive credit trajectory of the last few years, as well as a wave of construction projects coming from the 2014 World Cup and 2016 Olympics. “It offers a decent premium. If they wanted to, they could have priced a bit tighter,” says a participating EM dedicated investor, adding that the strong Brazilian construction credit offers a hedge against any downturn affecting raw material prices. “Their investors wanted liquidity and now they have given it to them,” says a banker away from the deal. HSBC, Santander and Banco do Brasil managed the sale. Construtora Norberto Odebrecht guarantees the bonds, rated BB+/BB. Proceeds go towards general corporate purposes, including additional equity investment in its subsidiaries. Odebrecht brought in April Brazil’s first overseas corporate high-yield issue since the start of the crisis, placing $200m in 2014 notes through Itau and Santander.