Brazil Set for Bond-Sale Surge After Petrobras’s $4 Billion Haul

  • Bradesco BBI forecasts a almost 50% jump in issuance this year
  • Braskem, Raizen Energia may follow Petrobras in tapping market

The bond sale by Brazilian oil giant Petrobras this week may just be the start of an issuance boom from the South American country.

Sugar producer Raizen Energia SA has hired banks to gauge interest for a possible overseas debt offering, while chemicals maker Braskem SA said it’s considering a sale of its own. They’re not alone. Mining behemoth Vale SA and aircraft producer Embraer SA are among other Brazilian companies also currently weighing raising cash in international debt markets, according to local news reports.

The growing interest in selling bonds abroad comes after corporate borrowing costs tumbled as Brazil’s economy finally began showing signs of rebounding and the government made headway in repairing its battered finances. Leandro Miranda, a managing director at Sao Paulo-based investment bank Banco Bradesco BBI SA, says the nation’s issuers may raise at least $30 billion in overseas debt sales in 2017. That would represent an almost 50 percent increase over last year’s total.

“We see a golden year ahead,” he said. “As funding costs fall and the economic outlook improves, there is room for companies to raise new money as well as continue engaging in liability-management deals.”

International bond sales from Brazilian companies and government have totaled just $28.4 billion in the past two years combined as the longest recession in more than a century and political turmoil sapped investor demand for new debt.

Miranda also says some companies may look to tap the market in the coming days, ahead of Donald Trump’s presidential inauguration Jan. 20 and before the Federal Reserve potentially raises interest rates.

Petroleo Brasileiro SA, as Petrobras is formally known, rushed to sell its $4 billion of bonds before Trump took office, Chief Executive Pedro Parente said Wednesday. The bonds due 2022 climbed 1.4 percent as of 8:40 a.m. in New York on Thursday, to 102.25 cents.

“There’s very big uncertainty in the market with the new U.S. president,” he told reporters in an interview at Petrobras’ headquarters in Rio de Janeiro. “One of the potential effects are higher interest rates. We wanted to be ahead of that.”

Pulp producer Fibria SA raised $700 million by issuing a 10-year bond on Wednesday, making it the second Brazilian company to sell so far this month.

The press offices of Vale and Embraer declined to comment on reports they may tap overseas debt markets.

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