Brazil no longer the darling of Latam’s DCM markets

The Federative Republic of Brazil extended its recent run of lowering the cost of its international funds in September by selling $1.25 billion in 2023 bonds to yield 2.686% (US treasuries plus 110 basis points).

The deal, which attracted orders of more than $4.5 billion, demonstrates the country’s continued appeal for international investors despite recent disappointing economic data. But while high-grade paper from Brazil continues to sell – Vale and Petrobras sandwiched the sovereign with large international bond deals last month – high-yield corporates report that they are unable to tap international markets at attractive rates and are instead relying on the booming domestic market for debentures.

Brazil’s coupon on the Baa2/BBB/BBB transaction was an all-time low of 2.625%, according to Dealogic. The sales effort of lead managers BTG Pactual and Deutsche Bank was made easier by the increasing appeal of investment-grade countries within emerging markets and the fact that Brazil hadn’t issued 10-year bonds since 2010.

However, Andrew Janszky, partner and head of law firm Milbank’s Latin America practice, says that international market sentiment has turned against Brazilian issuers.

For the full story visit Euromoney.com

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