BMG Lands Tier-2 Debt

Banco BMG has sold $300m in Tier-2 bonds amidst challenging market conditions, joining the ranks of Brazilian banks that have recently tapped the subordinated debt market. The Ba3/B issue priced at 98.15 with a 9.950% coupon to yield 10.250%, or UST plus 679.6bp, in line with 10.250%-area guidance. The book was heard to be just north of 1x subscribed, and the bond was heard trading flat late Thursday. The deal follows heavy investor interest in subordinated issuance from larger Brazilian banks. Bradesco sold $750m in 2019 Tier-2 notes to yield 6.750% in September on $2bn in demand, followed by Banco do Brasil’s $1.5bn 9.500% perpetual which saw $13bn. “Banco do Brasil and Bradesco are the premier banks in Brazil. This might not have the same draw,” says an EM investor who participated, referring to BMG, which is a mid-cap institution. The bank plans to use proceeds for general corporate purposes, including increasing the size of its loan portfolio and to boosting its reference capital. Morgan Stanley, Santander, BTG Pactual and UBS managed the sale. A $225m 60-year hybrid from Peru’s BCP is expected tomorrow, with guidance coming in the early morning.