JBS Adds to Canceled Brazil Bond Offerings Amid Petrobras Probe

JBS SA, the world’s biggest meat producer, became the third Brazilian company in a month to pull a planned bond sale as investors shun debt from the country.

The meatpacker said in a filing today it was canceling the sale and a tender offer for its 2018 notes due to market conditions. Competitor Marfrig Global Foods SA pulled a debt sale Nov. 19, and Cosan SA Industria e Comercio and Comgas Participacoes SA was said to scrap plans for an issue last week.

While global corporate bond sales reached a record this year of more than $4 trillion, Brazilian companies are struggling to attract investors as growth stalls and a corruption investigation into state-run Petroleo Brasileiro SA widens. The country’s corporate borrowers have raised $5.8 billion selling bonds internationally since June, 43 percent less than the same period last year. For the second half of the year, Brazilian companies are set for the lowest amount of bond sales since the financial crisis of 2008.

“Brazil is a dirty word these days,” Revisson Bonfim, the head of emerging-market analysis at Sterne Agee & Leach Inc., said by e-mail. “I can’t imagine any corporate offers coming out of the country this year.”

Marfrig, which supplies hamburger meat to McDonald’s Corp., said it canceled plans to sell seven-year bonds abroad after the yield demanded by investors didn’t meet its target. Cosan on Dec. 4 put plans to issue bonds on hold, according to a person familiar with the matter who asked not to be identified because the information is private.

Cut Estimates

Last week, Moody’s Investors Service cut Petrobras’s so called baseline credit assessment, which doesn’t take into account government support, to Ba1, one step below investment grade, amid continued investigation into the oil producer. In November, police arrested officials at construction companies that allegedly formed a cartel to win contracts, including 59 billion reais ($23 billion) from Petrobras.

Mauro Leos, Moody’s lead analyst for Brazil, said Dec. 5 that a bribery probe into Petrobras is contributing to the negative outlook on Brazil’s rating.

After entering a recession in the first half of the year, Brazil grew 0.1 percent in the third quarter, the national statistics agency said Nov. 28, missing the median estimate of 0.2 percent from 46 analysts surveyed by Bloomberg. Analysts in a central bank survey released today cut their growth estimates for this year and next.

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