Banco do Brasil braves markets but is denied US success

Banco do Brasil toughed out testing market conditions on Wednesday to raise $500m of long five year funding at record low levels. However, attempts to expand the borrower’s buyer base in the US fell foul of eurozone-inspired volatility. Bankers close to the deal said Brazil’s state controlled lender had hoped to attract US high grade investors by opting for 3(a)(2) exemption, a format rarely used by emerging market issuers that requires enhanced disclosure but confers index eligibility. "It’s something they wanted to pursue in order to make sure that the widest possible net was cast for this potential transaction," said one. He added, however, that the initiative met with limited success. "It was useful in a sense — we did get comments from investment grade dedicated accounts that they liked the fact that it was index eligible and we did see some new investors, but I think we could have had more participation from more investors under different market conditions," he said. Nevertheless, healthy demand from more traditional buyers pushed final order books out to $1.1bn and drove pricing in from official guidance of 4.125% — in line with whispers of low 4s — to close at 4%, giving a spread to Treasuries of 312.3bp. Estimates of the new issue premium ranged from 30bp to 35bp for the January 2017 transaction based on curve-adjusted levels from Banco do Brasil’s January 2015s, which were spotted at 104 with a 3.15% yield pre-announcement.

• Status
  redeemed
• Country of risk
  Brazil
• Redemption (put/call option)
  *** (***)
• Amount
  500,000,000 USD
• М/S&P/F
  — / — / —

• Full name
  Banco do Brasil S.A.
• Registration country
  Brazil
• Industry
  Banks