The surge in Brazilian corporate debt offering is continuing this week with more some $845 million worth of new deals announced late Monday alone, amid expectations that interest rates will not only remain high but could rise further.
Portuguese power company and Brazilian healthcare operator Athena Saúde are among those joining the rush to sell bonds, following a series of deal announcements starting late last week. It comes as prospects for a decline in local borrowing costs have begun to fade, despite expectations an easing cycle is about to start in the US.
A deterioration in Brazil’s inflation outlook has led investors to price in a hike in interest rates as early as next month, barely a year after the central bank started a cutting cycle in August 2023, Reuters reported on Tuesday.
Central bank policy makers are in data-dependent mode and will increase rates if necessary, the news agency said, citing comments on Tuesday by bank governor Roberto Campo Neto.
“Selic is in double digits and it looks like it is going to remain so until the end of the year, so the atmosphere remains propitious for fixed income, and its performance is driven by various instruments,” Guilherme Maranhão, head of the capital market structuring group at Brazilian association of capital markets Anbima, said at a news conference last week.
NEW DEALS
Among the issuers gearing up to tap the local market is Portuguese power company EDP, which said late Monday it is looking to raise BRL1.2 billion ($220 million) for the distribution arm of its Brazilian subsidiary in the state of Espírito Santo. The company hired Itaú BBA for the two-part sale.
Meanwhile, Brazilian healthcare operator Athena Saúde said it plans to issue BRL890 million in 2028 debentures to roll over debt, according to the minutes of a board meeting. It expects to price the notes at the DI interbank lending rate plus 3.5%. Itaú BBA is also coordinating this transaction while Citibank, Santander and UBS are joint bookrunners.
Brazilian education company Ânima also said Monday that it is heading to the market, with plans to sell BRL360 million worth of debentures maturing in 2029 and priced at 1.92% over the DI. The transaction is being coordinated by Bradesco BBI.
Truck rental company Vamos, for its part, said it intends to raise BRL685 million in agribusiness credit rights certificates due 2029 and priced at the DI plus 1.5%. The deal is being coordinated by BTG Pactual with XP as bookrunner.
Additionally, various regional subsidiaries of power company Energisa said they will issue debentures, including an offering of BRL295 million by its operation in Mato Grosso do Sul.
The offerings follows a slew of deals announced in recent days by companies including Marfrig, Eurofarma, Movida, Ultrafertil and Rumo.
Brazilian corporates raised BRL50 billion in the local bond market last month, up 300% from July 2023, according to Anbima.