Brazil’s Banco Cruzeiro Seeks Tender Offer Amid Writedown

Banco Cruzeiro do Sul SA’s $1.6 billion of bonds plunged after the deposit-insurance fund overseeing the Brazilian bank began a repurchasing offer that will saddle creditors with losses of as much as 74 percent.

Cruzeiro do Sul’s $400 million of subordinated notes due 2020 fell 1 cent to 30 cents on the dollar after the fund, known as FGC, offered 31 cents for the bonds to investors who tender by Aug. 28 and 26 cents afterward. The bank’s bonds due 2016 fell 9.25 to 47.75 cents at 2:34 p.m. in Sao Paulo, according to Trace, the bond price-reporting system of the Financial Industry Regulatory Authority. FGC offered 56 cents on those notes to creditors who sell by Aug. 28.