JBS makes splash with revived bond trade

Wed May 20, 2015 5:34pm EDT
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By Davide Scigliuzzo

NEW YORK, May 20 (IFR) - Brazilian beef producer JBS capitalized Wednesday on a recent upgrade and improving sentiment towards Brazil to revive a bond deal and buyback offer that had been postponed in December.

Through its American subsidiary JBS USA, the company launched an upsized US$900m 10-year non-call five bond at a final yield of 5.75%, the tight end of price talk of 5.75%-5.875%.

The deal enjoyed healthy demand after leads told investors that they had a US$300m anchor order based on pricing in the high 5% area, said one account.

Proceeds from the sale will be used to fund a buyback of JBS Finance II's 8.25% 2018s, effectively shifting some of the company's debt burden to the US subsidiary.

The new issue was seen offering a healthy premium over JBS USA's outstanding 5.875% 2024s, which were spotted trading on Wednesday at a cash price of around 103 or a yield 5.30%.

The success of today's trade, which started with a US$600m size, underscores how much sentiment toward Brazilian credits has improved.

This follows Standard & Poor's decision earlier this week to upgrade JBS S.A. and JBS USA to BB+ from BB with a positive outlook, citing stronger cash flows and lower debt levels.

Back in December, when US Treasury yields were not far off current levels, JBS began testing investor appetite for the new sale at a much higher yield of 6.125% area for a US$750m size.   Continued...