NEW YORK, May 20 (IFR) - More Brazilian borrowers sallied forth on Wednesday to take advantage of what remains a positive backdrop for the region.
Brazilian food company BRF, rated Baa3/BBB/BBB-, hired BNP Paribas, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley and Santander to market a rare euro-denominated Green bond to European accounts next week.
While this may not be the first Green bond from Latin America - Peruvian wind farm Energia Eolica printed one late last year - the deal underscores how an increasing number of the region’s borrowers are looking to develop this market.
“We are not at the stage of development in the Green bond market where it will offer pricing differentials (for Latin American borrowers),” said an EM syndicate official. “But as liquidity improves that should happen.”
At the same time, BRF Foods, which was created in 2009 from the merger between Sadia and Perdigao, is targeting some US$1.13bn in outstanding bonds as part of a cash tender for its 2017s, 2020s and 2022s.
At a tender price of 113.75 on the 5.875% 2022s, the borrower is seen offering a generous premium to the 111.0-112.00 secondary price seen earlier this week.
“We have had clients asking about BRF,” said a trader. “It is a nice pick up on price and investors can definitely find opportunities to get better paid in Brazil’s investment grade market.”
BRF was seen as one of the few credits that better withstood downward price action caused by the corruption scandal swirling around Brazilian state-controlled oil company Petrobras.
Meanwhile, JBS is taking another stab at issuing a bond after pulling a debt sale in December. The beef company is once again approaching investors with a 10-year non-call five but at a slightly smaller US$600m size.
Proceeds are expected to finance a tender for its 8.25% 2018 notes. Leads are Bank of America Merrill Lynch, BMO, Deutsche Bank, Morgan Stanley and Wells Fargo. Ratings are Ba2/BB+.
Away from Brazil, Mexican telco American upsized a exchangeable bond to EUR3bn from EUR2.25bn this morning on the back of strong demand. The five-year bonds will pay a coupon of 0%-0.5% and exchange at a premium of 40%-45% over today’s VWAP for KPN on Euronext Amsterdam.
Elsewhere, in the secondary markets, sovereign debt was essentially tracking US Treasury yields as investors awaited the release of FOMC minutest later today. Brazil 2025s were a touch lower in price terms at 98.60-98.90 as accounts continued to fret about the timing of US rate hikes. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)