October 3, 2012 / 12:56 AM / 8 years ago

Banco do Brasil completes 2012 funding after $1.75 bn issue

* Deal is bank’s largest-ever global debt offering

* Achieves its lowest borrowing costs for 10-year debt

SAO PAULO, Oct 2 (Reuters) - Banco do Brasil, the nation’s largest lender, is unlikely to sell more debt in global markets this year after raising $1.75 billion through the sale of 10-year debt on Tuesday, a senior executive said.

The bank, which this year sold $320 million in yen debt and Latin America’s first-ever subordinated bond with an interest deferral option, has “attained the goal of perfecting its yield curve thanks to very frequent issuances,” said José Mauricio Pereira Coelho, Banco do Brasil’s managing director for finance.

Tuesday’s offering was Banco do Brazil’s largest-ever bond fundraising transaction in international markets, Coelho said. The bank sold the senior dollar-denominated notes at a price of 98.978 cents on the dollar to yield 4 percent - the lowest it has achieved for that tenor. The bonds were rated baa1 by Moody’s.

The Banco do Brasil deal helped reinstill some confidence in Brazilian bank bonds weeks after the liquidation of mid-sized lender Banco Cruzeiro do Sul. Bondholders stand to lose their investment in Cruzeiro do Sul - which has $1.58 billion in outstanding dollar bonds.

Banco do Brasil last sold similar securities in 2010. Investors are stepping up purchases of emerging market bonds in transactions like Banco do Brasil’s and less in secondary markets where supply is short as investors search for yield.

Investors placed $11.4 billion in firm bids for the bonds, allowing Banco do Brasil to raise the funds at a cheaper-than-expected cost of borrowing. Pension funds and other institutional investors snapped up 43 percent of the deal, while private banking accounts bought 35 percent, Coelho added.

About 53 percent of firm orders for the bond came from Americas-based investors, and about 37 percent from European buyers, he noted.

Banco do Brasil’s investment-banking unit managed the transaction, alongside those of BNP Paribas, Banco Bradesco , BTG Pactual Group, Citigroup and JPMorgan Chase & Co.

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