Capital markets: Brazilian corporate debt
The grip of the credit crunch seems to be easing for Brazilian corporates wanting to issue debt. This optimism from Brazil is in line with the rest of Latin America, where the debt market fog is clearing.
Construtora Norberto Odebrecht, the Brazilian civil engineering and petrochemicals group, sold $200 million of 10-year notes in a reopening on April 7 with a yield of 7.426%. The bonds came in tighter than for issues by US and UK banks – an impressive outcome considering Odebrecht’s BB+ rating. "We are seeing a lot of demand for Brazilian debt. Investors can see that Brazilian corporates continue to have strong balance sheets and good management teams in place. Many big Brazilian names are also looking to diversify their risk by buying abroad – investors like this," says Patrick Gontier, head of fixed income at Bradesco’s BBI.
Odebrecht is the seventh Brazilian borrower to complete a bond offering in the international markets since January, according to Dealogic. Michael Schoen, head of debt for Latin America at Credit Suisse, says: "Investment grade issuers from Latin America have consistently had access to the capital markets. And recently, we were able to successfully reopen the Odebrecht bond, a non-investment grade deal.