Road Operator Prices First Widely-Marketed Infrastructure Debenture

Brazil’s AutoBan has priced a BRL1.1bn ($539m) domestic bond that includes a tranche qualifying as aninfrastructure debenture, becoming the first widely-marketed deal to take advantage of the legislation allowing tax exemptions to investors, according to sources following the sale. The toll road operator owned by Companhia de Concessoes Rodoviarias (CCR) has tightened pricing from initial expectations and upsized the 2017 debenture from BRL950m. A BRL965m tranche pays 109% of the DI, inside of a 109.2% ceiling, and does not qualify as an infrastructure debenture. A BRL135m inflation-linked tranche qualifying under the infrastructure law pays 2.7%, set to the yield of the government NTN-B bond plus 0.0%, in from an NTN-B plus 0.25% limit. “The demand for infrastructure debentures is very high. There is high demand for domestic credit of any kind right now,” says a Sao Paulo investor looking at the trade. Proceeds will go towards debt repayment and projects. Infrastructure bonds are local bonds offering tax advantages to international and Brazilian individual investors due to the use of proceeds. As with most of the early sales using the format, AutoBan’s sale was directed entirely to Brazilian buyers, with DCM bankers expecting international participation only after the asset has developed somewhat. Banco do Brasil, Caixa and HSBC are managing the sale, rated AAA on a national scale. Last week, ACS’s Montes Claros transmission project raised BRL25m in infrastructure bonds through a rule 476 restricted-format sale, becoming the first issuer in the asset class.