Marfrig Demand Fattens Up Ahead of Sale

Brazil’s Marfrig was heard with order books reaching $2.5bn late Tuesday for a new 2017 bond, and was out with 10%-area guidance ahead of today’s expected pricing. The B2/B+/B+ rated meatpacker revised guidance from 10.25%-area and earlier mid-10% talk. It is targeting $300m, according to ratings agencies. “Marfrig’s bonds have rallied, which has allowed them to tighten in yield,” says a DCM banker away from the sale. Marfrig’s 2016, 2018 and 2020 bonds were trading to yield around 9.14%, 9.91% and 10.54%, respectively, on the bid side Tuesday afternoon. “When they first called us they were talking 11%-12%, but now higher-beta names have been outperforming,” says an investor following the deal. Proceeds are to be used to improve the company’s capital structure by lengthening its debt profile. Bank of America Merrill Lynch, Bradesco, Banco do Brasil and Itau are managing the transaction, to be done through the Marfrig Holdings Europe unit. Marfrig Alimentos and certain subsidiaries are guarantors. BAML took Marfrig on a non-deal tour in November. Marfrig’s last bond sale was in May 2011, when it raised a $750m 2018 bond at a 8.6% yield.