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Banco do Brasil taps euros as EM mood lifts

Jul 19, 2013

Banco do Brasil tapped the euro market Thursday, increasing the deal size amid an improving tone for emerging market debt.

The €700m ($917m) deal, the Brazilian lender's first in euros since 2011, was three-times subscribed. It came as international debt markets gradually reopen to Latin borrowers.

Mexico's América Móvil sold a European deal earlier in the week, and Chilean power line firm Transelec is eyeing a potential return to the international debt market.

"Following our investor meetings in June, we monitored the market and saw volatility," Daniel Maria, executive manager at Banco do Brasil, told LatinFinance. "From last week we saw good signs of liquidity and understood it to be a good window to tap the market."

The heavy demand drove the bank to increase the size of the deal and tighten pricing. Lead managers Banco do Brasil, Bradesco, Deustche Bank, HSBC, JPMorgan and Santander priced the Baa1/BBB/BBB senior unsecured 2018 bond to yield 3.875%, or mid-swaps plus 284 basis points.

"It was cheap to the curve and not an easy name these days, because of Brazil. There was potential concern, but it priced at the right premium and there is a lack of paper in Europe," says a London-based senior EM portfolio manager.

The bank's CFO Ivan Monteiro told LatinFinance in January that the bank would focus on diversification of debt funding this year, with Japan and local LatAm currencies such as Chilean pesos among the options beyond euros and dollars. LF



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