Brasil Foods Pulls Trigger

Brasil Foods has followed Guatemala into the bond markets this week, as the latest window of opportunity appears to have extended from sovereigns to investment-grade corporate borrowers. The Baa3/BBB-/BBB- food products company sold $500m in new 2022 bonds amid continued volatility in broader markets, getting $1.66bn in demand. Its first issuance as a high-grade credit priced at 99.070, with a 5.875% coupon, to yield 6.000%, in line with 6%-area guidance. The bond was heard trading up about 0.75 points Thursday afternoon. Brasil Foods was thought to offer 20bp-30bp concession, depending on where the existing 2020s were spotted and adjusting for the curve extension, according to investors and bankers following the transaction. “Coming out when the UST is at an all-time low paid off for Brasil Foods,” says an investor following the name. “They saw a window and jumped in. Phenomenal pricing versus local pricing, even at 6%,” notes a banker away from the deal. There were 170 accounts said to participate, with US institutional investors accounting for two-thirds. Banco do Brasil, HSBC, Itau and Santander managed the sale. If the deal continues to perform well, bankers say the window could remain open for other high-quality issuers. A recent upgrade gave Brasil Foods 3 of 3 investment-grade ratings, and the company has altered its structure through moves last year, including a regulator-mandated asset swap with Marfrig and a dairy acquisition. Brasil Foods closed a $500m dollar and euro-denominated loan facility last month, and its last previous international bond issuance was in 2010, raising $750m at 10 years through Itau, JPMorgan and Santander.