Fibria Talks Liability Management

Brazil’s Fibria is taking advantage of low interest rates in different product areas to meet de-leveraging goals. The pulp and paper producer has raised $1.75bn in the bond market and $1.9bn in the syndicated loan market in the past 12 months, and will continue to add to the mix as it pursues the debt improvement plan it started following its birth from the merger of VCP and Aracruz. “We won’t stop – we will always be challenging our creditors with different instruments,” Joao Elek, director of finance, investor relations and risk management tells LatinFinance. “If we can get a discount from one facility, we immediately start talking to the other lenders to reduce the costs of another,” the former executive at cable provider NET says. Fibria has cut the average costs of funds on dollar debt to about 6.0%, from 7.1% at the time of the merger, and aims to take that level lower. It has BRL10.8bn in net debt and BRL13.2bn total debt, with an average maturity of 5.8 years, he says. Elek declines to disclose any specific plans for its next borrowing, though he notes that the bond markets remain attractive. “The low interest rate environment should prevail for longer than was expected 2 years ago,” he says, though he notes it is important for issuers to take advantage of the low-cost windows when they see them. Different pockets of liquidity are opening and closing all the time, he says, noting increasing demand from investors in Europe and Asia. At the time of Fibria’s last issue the demand was still majority US and Europe, he says. Bilateral debt can be similar in cost to the bond market at the moment, he explains, though bonds offer larger amounts and longer tenors. Fibria also makes use of pre-export financing, he says, and has negotiated to lower the average costs in this product area to about Libor plus 2.8% now, from Libor plus 4.0%-4.5% at the time of the merger. Fibria raised $1.18bn in a 2-tranche pre-export facility in December. It does not anticipate new equity