May 20, 2015 / 9:35 PM / 3 years ago

JBS makes splash with revived bond trade

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.

Hit by plunging oil prices and deteriorating sentiment in Brazil, JBS had eventually been forced to pull the deal despite cutting its size to US$500m and hiking the yield to 6.25%.

Bank of America Merrill Lynch was left-lead on the trade, with Bank of Montreal, Deutsche Bank, Morgan Stanley and Wells Fargo as joint books.

Elsewhere bonds issued by Pacific Rubiales jumped several points Wednesday on a Financial Times report that Mexican conglomerate Alfa and Harbour Energy could announce an acquisition of the oil company as soon as Thursday.

The credit has suffered from several price swings this month, first rallying on news of acquisition discussions only to sink on poorer-than-expected results and opposition by stakeholders to the purchase.

Its 2025s were closing at 85.125-86.125, up from the 83.50 seen last week.


Brazilian food company BRF (Baa3/BBB/BBB-) has hired BNP Paribas, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley and Santander GBM to schedule a series of fixed-income investor meetings in Europe ahead of the potential sale of a euro-denominated 144A/Reg S Green bond.

The meetings will take place in Frankfurt, Zurich, Geneva and Paris on May 26, and in Amsterdam and London on May 27.

Goldman Sachs is looking to bundle debt backing three of Colombia’s 4G highway projects and sell it as an up to US$500m 144A bond in the US markets as early as July.

Mario Alberto Huertas, the local construction company that won the highway concessions, has appointed Goldman Sachs as global co-ordinator and lead arranger for the financing efforts. It has also retained local bank Structure Banca de Inversion as financial adviser.

Reporting By Davide Scigliuzzo; Editing by Paul Kilby

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