Saudi Cash Is a Bonanza for Once-Distressed Beef Bonds in Brazil

  • State-owned Salic bought stake in Brazil’s Minerva in December
  • Company’s dollar notes have returned 16.9 percent this year

One of Brazil’s biggest beef-exporting companies is getting a big boost in the bond market after it raised money from Saudi Arabia.

Minerva SA’s $868 million of notes due in 2023 have soared to a 22-month high as the investment from state-owned Saudi Agricultural & Livestock Investment Co., or Salic, allows the company to reduce leverage and plan expansions to other Latin American countries. In February, the meatpacker raised 746.5 million reais ($228 million) from Salic.

It’s a reversal of fortune for Brazil’s second-biggest beef exporter, whose notes traded at distressed levels in March. Minerva, which has also benefited from a surge in export revenue, has now chopped its debt relative to earnings to an almost decade low. And its leverage may fall even further. Banco Bradesco SA forecasts it will drop to 2.5 times by the end of next year, which would be the lowest since 2007.

“As Minerva is on track to reduce its leverage, investors are happy to get exposure to this improving credit,” said Ian McCall, a money manager at Geneva-based Quesnell Capital SA.

Sao Paulo-based Minerva declined to comment on the performance of its bonds. Notes dues 2023 were unchanged at 105.5 cents at 11:06 a.m. in New York.

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