Marfrig Upsizes in Bond Return

Brazil’s Marfrig has sold $600m in new 2017 bonds, upsizing from a $300m-$500m expected size on the back of $4bn in demand from over 250 accounts. The B2/B+/B+ meatpacker priced at par with a 9.875% coupon to yield in line with 9.875%-area guidance that had been brought in from initial mid-10% price talk. It was also well inside of the 11%-12% levels it was heard considering at the beginning of marketing. The bonds were up 2.0 points in the grey, according to traders. “A decent value given flatness of the curve,” says a participating EM bond investor. The pricing was seen offering a flat to slight pickup to Marfrig’s 2018 bonds, trading around 9.6% on a yield-to-worst basis, according to bankers following the sale. Proceeds from the issue will be used mostly to repay short-term debt and strengthen the issuer’s cash position. Wednesday’s debt transaction and a December equity follow-on potentially represent a total debt reduction of about BRL1.3bn ($636m) over the next few quarters, according to Moody’s. Bank of America Merrill Lynch, Bradesco, Banco do Brasil and Itau managed the sale, done through the Marfrig Holdings Europe unit. Marfrig Alimentos and certain subsidiaries are guarantors. It was the company’s first bond sale since May 2011, when it raised a $750m 2018 deal at a 8.6% yield.