(Rewrites throughout after stocks and bonds rise, GEMM fund)
By Guillermo Parra-Bernal and Steve Slater
SAO PAULO/LONDON, Dec 14 (Reuters) - Grupo BTG Pactual SA’s stock and bonds rose for a second day on Monday, a sign of confidence that the Brazilian investment bank is making progress selling assets and raising cash two weeks after the arrest of founder André Esteves.
Buyers of BTG Pactual bonds are emerging as concerns eased that his arrest in a sweeping corruption probe could ensnare the bank. Units, as BTG Pactual stock is known, also found support after the bank undertook an aggressive buyback plan and employees and investors highly exposed to BTG Pactual stepped up purchases.
The partners who replaced Esteves at the helm of Latin America’s largest independent investment bank have rushed to instill investor confidence by putting up some assets for sale, reducing trading positions and halting new loans.
Antitrust approval for BTG Pactual’s sale of a stake in hospital chain Rede D‘Or São Luiz SA boosted confidence in the bank, traders said. Still, uncertainty lingered as it remained unclear whether BTG Pactual would be dragged into “Operation Car Wash,” the graft probe that landed Esteves in jail, traders said.
The price of BTG Pactual’s 4 percent bond due in January 2020 jumped 7 cents on the dollar to 63 cents. The 8.75 percent perpetual bond was unchanged at 54 cents, yielding 16.2 percent.
Units gained 3.3 percent, while most financial shares fell in the São Paulo Stock Exchange on Monday. They are down 55 percent since Nov. 24, the day before Esteves’ arrest.
According to traders, BTG Pactual units gained steam in the final minutes of Monday’s trading session after prosecutors stopped short of involving the bank in an investigation about bribery and illegal party fundraising.
Earlier in the day, BTG Pactual announced a further buyback for 22 million units.
BTG Pactual is evaluating options for its flagship Global Emerging Markets and Macro hedge fund, a person familiar with the matter said on Monday, adding that managers at the fund are writing to investors and will extend a deadline for redemption notices by six weeks to Jan. 29.
The decision is “to give all investors adequate time to understand the strategic options being evaluated”, the source said. The deadline for March 1 redemptions had been previously set as Dec. 16. A sale or management buyout are among the options being considered for the fund, industry sources said. (Editing by Lisa Von Ahn and Grant McCool)