Banco do Brasil Sells 300 Million Euros in Debt After July Issue
Banco do Brasil SA, Latin America’s largest bank by assets, sold 300 million euros ($415 million) more of bonds due in 2018 eight months after it first issued the debt in an effort to diversify sources of funding.
The state-controlled lender sold the notes to yield 3.169 percent, Jose Mauricio Pereira Coelho, the executive director for finance at Banco do Brasil, said by phone from Sao Paulo. The yield on the 700 million euros of existing bonds increased 0.13 percentage point to 3.06 percent today, according to data compiled by Bloomberg. Petroleo Brasileiro SA, the state-run oil company, sold $8.5 billion of bonds last week after selling $5.1 billion in debt denominated in euros and pounds in January.
“They chose a good timing for the new issue after Petrobras’s sale,” Carlos Gribel, vice president for emerging markets at INTL FCStone Securities Inc., said in a phone interview from Miami. “There is a growing demand from European investors for bonds in euros with Latin America names.”
Fitch Ratings said in a report today that it rated the securities BBB, the second-lowest investment grade and the same as Brazil’s government debt. The ratings company cited the government’s control of Banco do Brasil and the lender’s “systemic” importance. Two months ago, BNDES, the national development bank, issued 650 million euros in bonds maturing in 2019 and yielding 3.783 percent.
Banco do Brasil will consider more offerings this year in currencies including the U.S. dollar, Coelho said.
The last time Banco do Brasil issued bonds in dollars was in January 2013, when it raised $2 billion through the sale of perpetual securities.
“The sale is part of a strategy to bring more liquidity to the outstanding bonds,” Coelho said. “At the same time it is an interesting way of diversifying the bank’s investor base and getting closer to European investors.”
About 100 investors bought the bonds sold today, with 78 percent of the securities allocated among fund managers and financial institutions, according to Coelho.
Moody’s Investors Service changed its outlook on Brazil’s Baa2 rating, also the second-lowest investment grade, to stable from positive in October after Standard & Poor’s placed its comparable BBB on negative outlook in June.
To contact the reporter on this story: Filipe Pacheco in Sao Paulo at email@example.com