Banco do Brasil Grows Euro Debut

Banco do Brasil (BdB) has raised EUR750m in its debut euro transaction. The issuer upsized from an expected EUR500m, after getting EUR1.4bn in demand, according to bankers on the deal. The Baa2 rated 2016 priced at 99.453 with a 4.500% coupon to yield 4.625%, or mid-swaps plus 200bp, in line with 200bp area guidance. Initial whispers had been low 200s. The price compares fairly to the mid-swaps plus 160bp-165bp at which the BNDES 2017 euro-denominated bond had been trading, according to an investor. The issuer is not expected to swap proceeds, since it can use proceeds for euro trade finance, the investor says. A banker on the deal estimates that a new dollar bond from BdB might come at dollar mid-swaps plus 200bp, based on its dollar 2015 bond trading at dollar mid-swaps plus 175bp. This, in turn, indicates the state-controlled bank paid a slight premium when it priced at euro mid-swaps plus 200bp, he says. Recent euro issuance from LatAm has been competitive versus dollars, he adds. However, BdB is more interested in diversifying funding sources than arbitraging a different currency, the banker explains. US accounts took 32% of the book, with 18% going to Swiss, 11% French, 8% German and 31% other European buyers, according to a banker on the deal. Fund managers account for 58% of the book. BdB, Votorantim, Deutsche Bank and BNP Paribas managed the process. A banker on the trade says other candidates to issue euro-denominated bonds could include issuers from last year looking to build curves, as well as banks and commodity exporters. In addition to BNDES, last year’s tally included Votorantim, Vale, Telemar, CAF and America Movil.