Itau set to reopen US dollar market for Brazil

lunes 18 de mayo de 2015 13:34 GYT

By Davide Scigliuzzo

NEW YORK, May 18 (IFR) - Brazil's largest private bank Itau is set to break a six-month drought in dollar bond issuance from the country with a three-year bond offering which will price on Monday.

Itau's bond deal, rated Baa3/BBB-/BBB+, follows a new issue from Brazilian cement maker Votorantim Cimentos in the euro market on May 7.

Itau's planned offering would be the first such sale by a Brazilian issuer in the US dollar market since November, when a slew of arrests connected to an alleged bribery scheme at state-run oil company Petrobras rattled market's faith in the country.

"We are seeing (Itau's deal) as a real reopener of the US dollar market for Brazil," said one syndicate banker not involved in either sale. "I don't know if Votorantim was the icebreaker everyone was looking for."

At initial price thoughts of low 200bp area over US Treasuries, Itau's new bond was seen offering investors an attractive yield to lure them back into the market. That level was later revised to guidance of 200bp, plus or minus 10bp.

"There is no better credit than Itau to reopen the market," said one New York-based origination banker. "It will test the appetite for Brazil and Brazilian risk."

Though it could have raised funds issuing locally at a cheaper cost, bankers said raising funds in dollars made sense for the bank, which recently bid US$2.2bn for a controlling stake in Chilean lender CorpBanca.

Fresh doubts over the completion of the merger emerged last week when CorpBanca said the value of the merger was worth more than originally calculated.   Continuación...