HY Debut Lands at Wide End

Grupo Virgolino de Oliveira (GVO) has raised $300m in its debut dollar bond transaction, getting maximum size and pricing at the wide end of guidance. The B3 rated 2018 NC4 priced at par with a 10.50% coupon, to yield at the wide end of 10.25%-10.50% guidance and 10.0%-10.5% whispers. The issuer drew more than $700m in orders, according to bankers on the deal, with mostly EM and US high-yield focused investors. The price level seemed to fit, with the bond up 0.50-0.75 point Friday afternoon, according to traders. It had been heard looking for $200m-$300m with rating agencies seeing a $250m sale. “It’s an attractive yield and the strength of the company is predicated on the co-operative being strong and being able to provide liquidity, says a London-based EM investor. However, he notes, it is the peak of the sugar cycle and buyers would be betting on continued strong prices. GVO is a member of the Copersucar cooperative, and investors say this helps mitigate concerns about price volatility and small issuer liquidity in a commodity exporting business. Copersucar acts as a guaranteed buyer for co-op members’ production, reducing some of the risks of the commodities market. The company was founded in 1921 and operates 4 mills in Sao Paulo state. Proceeds are marked for repaying outstanding debt and for general corporate purposes. BTG Pactual, Credit Suisse, Itau and Santander managed the sale.