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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