Aracruz Offers AAA Bonds
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,...
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