An investigation into some of Brazil’s major meatpacking companies has hit the performance of the meat and poultry exporters’ bonds in the secondary market.
JBS’ 7.25% 2024 notes fell almost five points to between 102.5 and 103.5, while BRF saw its 4.35% 2026 bonds shed five points to 89.5, debt capital markets bankers told LatinFinance. Marfrig’s 7% 2024 notes were also down two points after several key export markets suspended imports of Brazilian meat and chicken.
“The temporary stoppages of meat and chicken purchases has got [investors] scooping up the paper at their weakest,” one banker said about reverse inquiries for the notes.
The investigation comes after sources told LatinFinance last week that Ba1/BBB/BBB rated BRF was in talks for a new bond sale.
“We thought [BRF] was next in the pipeline,” a second banker said. “But it is safe to say we would want to see their existing notes trade better in secondaries first.”
Brazilian officials are working to limit the fallout from allegations that some of the country’s beef and poultry producers may have bribed food inspectors to approve the sale of tainted meat.
Chile, China, South Korea and the European Union have announced full or partial restrictions on Brazilian shipments of meat and poultry.
Erick Rodrigues, a vice president and senior analyst at Moody’s, said the investigation will likely disrupt meat sales and hurt poultry exporters. He also said it is too soon to “quantify credit implication” until Brazil’s federal police announces additional findings from the investigation.
“While some meatpackers are not implicated, the entire industry will suffer from the related disruption in trade,” Rodrigues said in a report.
Last year, China and Hong Kong-based importers generated $773m in revenues for Brazilian poultry and $1.8bn for Brazilian beef. Chile bought $300m of Brazilian beef, according to Moody’s.