Ceagro bonds sink on missed payment
By Paul Kilby
NEW YORK, May 22 (IFR) - Brazilian commodities trading company Ceagro's bonds fell multiple points on Friday after it missed a payment on its outstanding 2016s.
The price on the 10.75% 2016, which was being quoted in the 90s earlier this week, has plummeted to around 20.00 after the company said it failed to pay interest due on May 16.
"Due to significant losses resulting from adverse economic conditions, coupled with the instability of recent harvests and other unfavorable macro-economic issues, the Company decided to restructure its activities," the company said in an email sent Friday.
The company will suspend debt payments until a restructuring with creditors is finalized, it said. Ceagro comes on the back of a series of recent defaults in Brazil where borrowers have been struggling to adjust to slowing economic growth and reduced access to the credit markets.
"This is just one more example of where we are in the credit cycle in Brazil, but it won't shake the ground in terms of confidence," said a banker.
Standard & Poor's downgraded Ceagro to D from B late Thursday, citing the missed payment on the 2016s and the expectation that the restructuring process won't be completed before the end of a unspecified grace period.
"Our recovery rating on the debt rating remains unchanged at '3', indicating our expectation for meaningful (50% to 70%; in the higher half of the range) recovery in the event of payment default," said the agency.
Ceagro first sold US$100m of the 2016s in 2010 when it was then rated BB-. The bonds, which carry a six-month debt service reserve and offshore collection accounts, were priced at 98.965 to yield 11% through sole lead Jefferies.
The company embarked on a non-deal roadshow through Itau in April last year, approaching accounts in London, but no deal ever emerged. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)
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