Safra Whispers Low Double Digits

Banco Safra is heard whispering 10.5% area on its 5-year senior unsecured Global BRL bond, with pricing expected as soon as today. Investors are comping against Banque Safra Luxembourg’s BRL400m Reg S only 10% 2015 (BBB minus), which was priced at 99.627% to yield 10.125% in June and was trading Tuesday afternoon at around 9.9%. “A 10.25% handle would be fine [to participate],” notes one senior portfolio manager following the name. Another, albeit less than perfect, comp is Banco Votorantim’s inflation-linked BRL1bn 6.25% 2016s (Baa2/BBB minus), which have been trading around 10% including IPCA. Investors are comfortable taking exposure to Banco Safra risk in light of the Baa2 and BBB minus ratings from Moody’s and Fitch, but increasing concerns over rapid credit growth in Brazil may mean that accounts will demand higher yields. Investors say Safra is looking at a BRL 300-BRL400m size for the 144A/Reg S deal. JPMorgan and UBS are the leads.