Safra Shrugs off Volatility l

Banco Safra sailed through a turbulent market to price a larger-than-expected BRL800m ($512m) global BRL bond, upsizing from the BRL500m originally pitched to investors after books swelled to BRL1.6bn plus. This came after another volatile day for stock markets as investors fretted about global growth and remained guarded about taking on risk, but also held out hope for more stimulus from the US Federal Reserve. Nevertheless, Safra seemed to have been given a new lease on life after demand grew for its new BRL global bond and leads were able to adjust 10.5% area talk tighter to 10.25%-10.375% before pricing at par to yield 10.25%. The bonds jumped on the break to reach a high of around 101.00 Wednesday before settling down to around 100.75. The deal’s success was put down to pricing that was seen as cheap against secondary levels on other BRL globals as well as an ability to shine in a primary market where there has been little or no supply of late. “I’m seeing this cheap to anything else in BRL,” says a participating investor. For instance, McDonald’s franchise Arcos Dorados’ BRL 400m 5-year global bonds were trading at a more expensive 8.5% Wednesday afternoon. The issue also represented a 25bp pick up to trading levels on the RegS only Banque Safra Luxembourg’s 10% 2015s, which were seen representing European risk as opposed the pure Brazil exposure on Safra’s latest offering. That said, some rival bankers thought at 10.25%, Safra achieved competitive pricing against local funding. Aside from attractive double digit yields and investors’ high comfort levels with the investment grade credit, it didn’t hurt that the bonds faced little competition in what has been a quiet primary market, not to mention increased demand for offshore BRL assets after the government imposed further tax burdens on local market transactions. Safra’s success has heightened expectation of more BRL Global trades on the horizon, with one investor saying that toll-road credit CCR could try it