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More debt buybacks a possibility for Brazil’s Marfrig: CEO

Nov 22, 2013

The Brazilian meat producer will consider liability management exercises in 2014, depending on the spreads on its existing bonds, says Sergio Rial


Brazil-based meat producer Marfrig could launch further debt buyback or tender offers next year, depending on how its bonds trade, its chief executive has told LatinFinance.

The firm bought back just over half of its $375m 2016 bond in September, funded through the sale of a new 2021 bond.

"The recent funding and tender for the 2016 was really aimed at eliminating any important maturities for us between now and 2017," Sergio Rial, the chief executive, said. "I’m glad to report that we have been able to accomplish that. We have no important maturities in this period, which I think is good."

Marfrig is aiming to cut its leverage, and so it does not plan to offer new debt, Rial said. The firm reported net debt of 6.7 billion reais ($2.9 billion) at the end of the third quarter, with an average cost of 7.8%.

"Our approach would be to continue to monitor the market to seize any opportunity to reignite our liability management process," he said. The company would want its spreads to compress further before considering a new liability management exercise.

"We’re trading, relative to some peers, 300 basis points higher. At this point in time there should be no fundamental reason for that. That will be a function of us continuing to present better results," says Rial.

Marfrig reported a net loss, stripped of foreign exchange variations and the cost of transferred debt, of 92.5 million reais in the third quarter, although net revenues at the group rose 15% year on year to 4.9 billion reias. LF



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