REFILE-Banrisul nears target on tender of sub debt
(Refiling for wider distribution)
By Paul Kilby
NEW YORK, Sept 28 (IFR) - Creditors holding US$248.96m of 7.375% 2022s issued by Banco do Estado do Rio Grande do Sul (Banrisul) have submitted bids in a tender designed to retire old-stlye Basel II notes.
The Brazilian state-owned bank is looking to buy back up to US$275m of the notes at a time when its owner the State of Rio Grande do Sul is struggling to cover its liabilities.
The 2022s have been underperforming securities of other Brazilian mid-sized banks and has widened 573bp on a Z-spread basis between July and mid September, analysts at Brazilian brokerage VotorantimCorretora wrote last week.
The bond's underperformance is largely due to a deteriorating credit portfolio and the uncertainties created by the severe fiscal crisis in the state of Rio Grande do Sul, which owns Banrisul, it said.
Banrisul should be able to withstand the withdrawal of BR$1bn in judicial deposits which the state hopes to carry out as it seeks to raise more funding, the brokerage said.
"We believe the bank still may have the elements needed to assure a reasonable degree of solvability and recovery, thanks to its self-sustainable retail banking model," it said.
That the bank is able to tender for outstanding bonds during the current crisis demonstrates its "robust liquidity". Continuación...