Brazil Miner Lifts Euro Financing Hopes

Vale’s success in the euro market this week fuels expectations of more LatAm bond deals to come from Europe. “This deal shows that the euro market is open and there’s a very attractive basis swap,” says a banker on Vale. The Brazil-based miner raised EUR750m in 8-year money but could easily have secured double that for a 10-year, say bankers on the trade. An order book exceeding EUR8bn highlights robust appetite for LatAm credit from an investor base looking to diversify. However, demand will likely be limited to larger blue chips. “Europe is still a relatively conservative investor base,” says the banker who led Vale, adding that there is a clear OECD bias. Chile and Mexico are OECD members, and while the group says it is ready to start talks with Brazil whenever it is ready, the biggest LatAm economy is still excluded. Colombia is another longer term possible member. “You still need to be careful what names you bring,” says a LatAm DCM official, speaking of euro appetite for LatAm corporates. Candidates include Gerdau, America Movil and quasi-sovereigns like BNDES. Petrobras as is also a possibility, though bankers say it is consumed by a $40bn-$60bn capitalization plan. “The sovereign is a good candidate to issue,” says another banker, speaking of Brazil.