Issuers head back to Brazilian bond market

Issuers head back to Brazilian bond market

Asset Management Bonds Debt Capital Markets Corporate & Sovereign Strategy Debenture Funds Brazil Latin America Coronavirus

Bond issuers are heading back to the Brazilian market, led by the pharmaceutical company Hypera Pharma and the local business of the European retailer C&A, although the coronavirus outbreak has shown few signs of slowing down.

C&A Modas said on Tuesday that it will issue BRL500 million ($96 million) worth of commercial notes in its first such sale in Brazil's debt market, expecting to price the three-year paper at the DI interbank lending rate plus 1.09%.

"The funds raised with the issuance will be fully allocated to the company's working capital, aimed at optimizing the company's capital structure," C&A said in a securities filing.

The company did not say which banks it has hired to coordinate the deal, but it has retained Oliveira Trust as the trustee, according to the minutes from a board meeting on March 30. C&A will issue the notes on the B3 stock exchange in São Paulo.

C&A raised BRL1.63 billion from an initial public offering (IPO) on the B3 in October last year. Following the spread of the coronavirus to Brazil, however, it said it would close all brick-and-mortar stores on March 22.

Hypera, meanwhile, said on Monday that its board approved the sale of BRL3.5 billion worth of six-year debentures in the local market.

The company did not say how it plans to spend the proceeds. But it said on March 2 that it had agreed to spend $825 million to buy 18 over-the-counter (OTC) and prescription drugs from Japan's Takeda Pharmaceutical Company. Two weeks later, Hypera said it reached a deal to sell 12 of those brands to local drugmaker Eurofarma Laboratórios for $161 million.

With the Takeda deal and the acquisition last year of two brands from Germany's Boehringer Ingelheim, Hypera is set to become the largest pharmaceutical company in Brazil with a market share of around 20%.

With C&A and Hypera preparing to come to the bond market, other issuers have carried out smaller deals recently, ranging in size from BRL100 million to BRL660 million, according to the local capital markets association Anbima.

Eletromidia, an outdoor advertising company owned by the US private equity firm H.I.G. Capital, sold BRL660 million worth of six-year debentures at the DI plus 2.7%, led by Bradesco BBI. Eletromidia completed the acquisition of local rival Elemidia for an undisclosed amount in February this year.

In other local debt deals, ethanol and biomass producer Cerradinho Bioenergia worked with Itaú BBA on a BRL200 million sale that priced at the IPCA consumer price index plus 4.15%, while local warehouse retail chain Tenda Atacado turned to Bradesco BBI to issue BRL110 million in four-year notes at the DI plus 1.68% and the bottle maker Vidroporto hired Itaú BBA to arrange BRL100 million in five-year debentures at the DI plus 2.3%, according to Anbima.