Three Latin American companies tapped the international bond market on Wednesday as issuers sought to lock in lower borrowing costs following a lull in dealmaking last month.
Brazilian state-owned oil company Petrobras led the trio on Wednesday with a two-part deal totaling $2 billion, while pulp and paper giant Suzano and Chilean energy company Colbún respectively raised $1 billion and $500 million with 10-year bonds. They followed placements by the Brazilian government and Chilean mining company Antofagasta on Tuesday.
Spreads in the region are tight and and market volatility is low, providing more favorable conditions for issuers, said Edgardo Sternberg, an emerging markets portfolio manager at Boston-based asset manager Loomis Sayles.
“We are expecting three more deals tomorrow and more to come next week,” he told LatinFinance. “What is helping in the quick pick-up in activity is that US Treasury yields are much lower since the end of July.”
The yield on the 10-year US Treasury bonds fell to 4.22% on Wednesday, down from a recent high of 4.38% in July.
According to Lazslo Lueska, a partner and portfolio manager at São Paulo-based investment firm Octante Capital, issuers from Brazil and Chile may be taking advantage of more favorable market conditions before potential election-related volatility. Chile holds a presidential election in November this year and Brazil in October next year.
“It is a good moment to anticipate liability management,” Lueska said.
OIL BONDS
Petrobras priced $1 billion worth of 5.125% 2030 bonds at 99.024 to yield 5.35% on Wednesday after opening the initial price talk in the 5.7% area and setting guidance at around 5.4%, plus or minus five basis points, according to a source familiar with the deals.
It also priced $1 billion in 6.25% 2036 notes at 97.784 to yield 6.55% after opening the deal in the 6.9% area and setting guidance at around 6.%, plus or minus five basis points, the source said.
Orders for the two series of notes peaked at $6.5 billion before closing at $5.6 billion, the person added.
BBVA, Citi, Deutsche Bank, Itaú BBA, Santander and UBS were joint bookrunners on the offering, the company said in a press release, adding that it will use the proceeds for general corporate purposes.
PULP NOTES
Meanwhile, Suzano priced 5.5% 2036 bonds at 98.714 to yield 5.667%, or 145 basis points over US Treasury bonds. It opened the initial price talk in the 180 basis points area and set guidance at around 150, plus or minus five basis points, before launching the deal, the source said.
Demand for the long 10-year notes peaked at $5.1 billion before coming down to $4.2 billion, according to the source.
Bank of America, BNP Paribas, Itaú BBA, JPMorgan, Mizuho and Rabobank acted as global coordinators, working along with Crédit Agricole, Goldman Sachs, HSBC, MUFG, Safra, Santander, Scotiabank, SMBC and UBS as joint bookrunners.
Suzano will use the proceeds to fund an ongoing tender offer for its 4.5% 2026 and 4% 2027 global bonds.
REFI DEAL
Colbún, for its part, priced the 5.375% 2035 green bonds at 99.694 to yield 5.415%, equal to a spread of 120 basis points over USTs. It opened the initial price talk at around 150 basis points and went directly to launch, according to the source.
Investors placed as much as $2.9 billion in orders, the person added.
BBVA, Bank of America, JPMorgan, Santander and SMBC were global coordinators, working with Mizuho and MUFG as joint bookrunners.
Colbún will use the sale proceeds to repurchase its 2027 green global bonds and fund eligible green projects, it said in a presentation to investors.
The company separately launched a tender offer to buy back any or all of the $500 million outstanding on its 3.95% 2027 green bonds. It is offering to pay $1,000.50 for every note tendered by September 9, it said in a press release.