Odebrecht Taps Long Bonds for LM

Brazil’s Odebrecht is set to replace shorter debt with cheaper 30-year money, having reopened its 2042 bonds for $450m. The Baa3/BBB minus sale takes the outstanding size to $850m and will fund a tender offer for 2020 and 2023 bonds. The builder reopened the 7.125% coupon bonds at 116.266 to yield 5.95%, at the tight end of 6.00% (+/- 5bp) guidance, that followed low-6.00% whispers. Investors put in for $2.2bn in demand and the bonds were trading up 0.05-0.25 points in the grey, according to an investor. Participation was similar to other Odebrecht deals, with private banking, US high grade, and global accounts comprising the 137 in orders. Bradesco, BNP Paribas, Banco do Brasil, and Citigroup managed with Mitsubishi-UFJ as co-manager. Proceeds will be used to purchase a portion of the 2020 and 2023 notes. “Nice trade that will not increase net debt because of the tender for 2020 and 2023 bonds,” says a banker away from the sale. He adds the 2042 tap came close to flat to the bid side. Bankers on the deal spotted the 2042s at 5.92% pre-announcement. Odebrecht has launched a cash tender targeting the $800m outstanding in 7.00% 2020 bonds and $500m outstanding in 6.00% 2023 bonds. Accepting holders will receive $1,712.50 per $1,000 principal of the 2020 and $1,190.00 per $1,000 principal of the 2023. It has set a $450m limit between the two. The tender offer is expected to expire after 20 days. The bonds were originally sold in June at a 7.25% yield, when Odebrecht raised $1bn in new 10 and 30-year bonds. Credit Suisse, Itau, JPMorgan and Santander led the initial transaction.