Brazilians opt for bank debt as volatility slows bond market

Brazilians opt for bank debt as volatility slows bond market

Capital Markets Loans Brazil

After a flurry of new bond issues to open 2018, the cross-border securities space has slowed on the back of trade volatility, upcoming presidential elections and the recent sell-off in US Treasuries.

Despite the simmering, corporates, Brazilian in particular, have turned to bank debt, and a number of investor friendly names have signed syndicated loans and credit agreements.

State-run energy firm Petrobras snared $1bn in 2022 debt with at least six banks last November, it also signed terms for a $300m 2023 loan with three banks in the same month and confirmed $5bn in 2027 debt with the China Development Bank a month later.

In March, Petrobras then signed a five-year $4.35bn revolving credit facility with at least 17 institutions and rounded out last month with a BRL2bn ($610m) credit line with Banco do Brasil.

Following its acquisition of rival pulp and paper firm Fibria, Suzano Papel also reached out to the loans market for a two-tranche $9.2bn credit facility last month. The company appointed four banks to build the books, which remains in syndication.

Earlier in March, Suzano also penned a five-year $750m export prepayment facility from a host of banks, while Brazil's Raizen Energia signed $850m in bank debt over six years.

"We are seeing the refinancing opportunities now prior to the election," one loans banker said in reference to Brazil's presidential election in October. "Plus, the news about Lula was well-received by the markets."

Brazil's Supreme Court last week ruled that the former President must serve out his prison sentence, all but scuppering his chances of reelection this October. He will still appeal the corruption conviction against him.

Outside the corporate lending space, Sepia MV30 advanced terms over its 15-year $500m loan with seven lenders. The special purpose vehicle operating an FPSO of the same name in Brazil chose two lead coordinators to build the facility, which then attracted at least five MLAs.

Retailers file into Braskem talks

On Thursday, a number of commercial lenders flocked to bank meetings for Braskem's five-year $1bn syndicated loan, LatinFinance understands.

According to one banker, more than 35 institutions turned up to the meeting in New York, and bookrunners are confident they can wrap up syndication during the early stages of May.

The Ba1/BBB-/BBB- rated Brazilian petrochemicals unit appointed six bookrunners, while three banks joined as mandated lead arrangers, two loans sources said.

For the full details on Braskem's syndicated loan, sign up for a trial to LatinFinance's Daily Brief service.