Brazil's Companies Tap Debt Market Ahead of World Cup
SÃO PAULO--Three Brazilian companies jumped into international debt markets on Wednesday as they sought to borrow before the World Cup kicks off on Thursday.
State-run bank Banco do Brasil SA said it raised $2.5 billion with a perpetual-bond issue paying an annual interest rate of 9%. The issue attracted demand of $12.5 billion from investors. The bank said it would use the proceeds to reinforce its capital position.
JBS SA, the world's biggest meatpacker in terms of revenue, is planning to raise at least $750 million and local industrial conglomerate Votorantim Industrial plans to borrow $400 million, according to bankers participating in the offerings.
"Companies want to take advantage of the market now, before the start of the World Cup," said Marcelo Barbosa Lima, vice president for emerging markets at INTL FCStone Securities Inc., which is based in Miami. After the event starts, there will probably be fewer investors in the market, he said, adding that many in the northern hemisphere will also be on vacation over the summer.
The World Cup will start on Thursday and runs through July 13. On days when Brazil's national team plays, much of Brazil will be on vacation.
JBS and Votorantim are planning to use the proceeds from their respective 10-year offers to buy back more-expensive outstanding bonds.
Earlier on Wednesday, JBS offered to buy back a total of $650 million of its bonds maturing in 2016. The company offered to buy back $350 million of bonds paying 10.5% interest and $300 million of 10.25% bonds.