Secondary Marketplace - Business & Banking

In February, Aracruz, the Brazilian paper and pulp producer, issued $250 million in seven-year bonds backed by export receivables. The bonds were issued at par with a fixed annual coupon of 5.984%. Agílio Macedo, CFO of Aracruz, says the bonds will refinance maturing long-term debt and will also replace $130 million-worth of eurobonds that matured last year. The securitization structure, which has become increasingly popular for Latin American corporates over the past year, allowed the bonds to achieve an investment grade rating of BBB- from Standard&Poor's. "The securitization structure will allow us to issue new tranches of the bond in the future based on our export capacity," says Macedo. Aracruz could issue another $750 million in bonds if needed, but Macedo does not expect the company to tap the market again this year. Aracruz insured the bond with monoline insurance company, XL Capital Assurance, which gave it an AAA rating. Says Macedo, "We considered the possibility of doing the bond unwrapped,...