Banco do Brasil taps euros as EM mood lifts
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.
América Móvil sold a European deal earlier in the
week, and Chilean power line firm
Transelec is eyeing a potential return to the international
"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