Marfrig upsizes seven-year bond after getting US$2bn in orders

miércoles 25 de mayo de 2016 15:14 GYT

By Paul Kilby

NEW YORK, May 25 (IFR) - Brazilian beef producer Marfrig was set to price an upsized US$750m seven-year non-call three bond at a yield of 8.25% on Wednesday after amassing a book of over US$2bn.

Marfrig, which also has assets in the US, had been expected to win favor among investors despite the country's economic slump hurting its bottom line.

It was also seen as a direct beneficiary of increased optimism for the Brazilian economy after the start of an impeachment process against former president Dilma Rousseff and appointment of a market-friendly administration.

Leads set a final yield on Marfrig's bond (rated B2/B+/B+) at 8.25%, the tight end of guidance of 8.375% (+/-12.5bp) and within the earlier IPT range of low to mid 8s. They also upsized the deal from US$500m.

An improved market tone also helped. Latin American debt markets were looking up on Wednesday as crude neared US$50 a barrel and Brazil's Congress approved the government's new fiscal target - a legislative victory for newly appointed president Michel Temer.

Calculating a new issue premium was difficult given that much of the company's underlying bonds have been targeted in buy backs or were trading on a yield-to-call basis.

Yields on Marfrig's most recent issue - a 6.875% 2019 that was sold in June 2014 - were quoting below 7% this week, down from a year-to-date high of 10.68% in early January, according to Thomson Reuters data.

"I think fair value is around 8% or less," said an analyst looking at the existing 2019s.   Continuación...