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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