Virgolino Looks to Dollar Bond Market

Grupo Virgolino de Oliveira (GVO), a Brazilian sugar and ethanol producer that is the largest member of the Copersucar coop, plans to meet investors to discuss a debut 2018 NC4 dollar bond. GVO’s competitor Cosan is a familiar name to bond investors and analysts had tipped the Brazilian sugar sector as a source of new high yield debut issuers to give the buyside the spread it craves. There is no size officially indicated, though Moody’s spots it at $250m in a ratings report assigning a B3 mark. GVO is scheduled to begin meeting investors Friday in Switzerland. It will visit London, New York, Boston and possibly additional locations, finishing January 20. The notes are rated B3/B, which could see it price at a double-digit yield, according to an analyst and a banker away from the trade. BTG Pactual, Credit Suisse, Itau and Santander are managing the sale. The company was founded in 1921 and operates 4 mills in Sao Paulo state. Despite being in a volatile industry, Moody’s notes improved profitability and cashflow in 2009-2010, thanks to increased operating efficiencies after the launch of 2 new plants. “The completion of the $250m issuance is key to align Virgolino’s debt maturity schedule to current cash flow generation level,” the agency says. It expects further deleveraging measures over the next 18 months.