Loan market: Silver linings
Loan volumes are likely to pick up later in 2013, especially for acquisitions. But attractive rates on bonds and local currency deals continue to draw borrowers
By Karen SchwartzWhen Brazil's Cosan sought funding for its
3.4 billion real purchase of a 60.1% stake in Brazilian gas
distributor Comgas last May, the loan market was the way to go.
The sugar producer and energy distributor took out a 3.3
billion real, eight-year loan from Bradesco and Itaú to
fund the purchase, with BTG Pactual later buying part of the
deal. Now, Ba2 rated Cosan is looking to refinance the debt, as
demand for Brazilian credit continues and the company's options
for financing expand, says CFO Marcelo Martins. As market
conditions have improved and the average cost of transactions
like this one have come down, it has a number of choices. These
include selling real denominated bonds locally or
internationally. Loans, in part because of their pricing
compared with bonds, have taken a backseat for LatAm borrowers.
Companies are turning increasingly to bonds for medium-term
funding. Attractive rates...
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