National Treasury’s record issuance and Minerva sale signal reopening, but investors remain selective amid global volatility
Brazil’s National Treasury returned to the European bond market with a €5 billion issuance, the largest in its history. Despite market volatility tied to the war in Iran, the transaction drew nearly €16 billion in demand and attracted more than 700 investors.
Banking executives said the deal could pave the way for Brazilian companies to tap the euro-denominated bond market. The strong reception reflects pent-up demand after Brazil stayed away from euro issuance for more than a decade.
“The deal showed investors had been missing Brazil in the euro market,” said Claudio Matos, head of global capital markets for Brazil at BNP Paribas, which coordinated the offering. “It also confirmed that, despite turbulence, there is still appetite for well-structured debt deals.”
Pipeline builds in dollars
Executives in fixed income say conditions are also favorable for dollar issuance, with around eight companies preparing to come to market in the next two weeks. Expected names include Banco do Brasil, Caixa Econômica Federal and C6 Bank, according to sources.
On Wednesday (15), Brazilian meatpacker Minerva raised $600 million in a 10-year bond, marking its return to the dollar market since 2023. Minerva’s deal priced at 7.62%, in line with expectations. The company said proceeds will be used to repay debt and for general corporate purposes.
Another potential issuer is J&F, the holding company of the Batista family. Earlier in the current issuance cycle, JBS, part of the same group, raised $500 million through a reopening of a $2 billion deal completed in late March.
Valor had reported earlier this week that the Treasury initially aimed to raise €1.5 billion after investor meetings. Strong demand allowed the government to increase the size significantly.
Terms and structure
The Treasury split the issuance into three tranches with maturities of four, seven and ten years. Pricing tightened by 35 basis points from initial guidance.
The shortest tranche priced at 145 basis points above the mid-swap rate, a benchmark based on European government bonds. The seven- and ten-year notes came at spreads of 210 basis points and 255 basis points, respectively.
The €2 billion bond due in 2030 carries a 4.24% annual coupon. The €1.5 billion 2033 bond offers a 4.87% coupon and a yield of 5.03%, while the €1.5 billion 2036 bond pays a 5.5% coupon with a 5.62% yield.
Selective appetite
Despite the reopening and prospects for further issuance, the market remains cautious. Investors are still selective, with stronger demand focused on higher-quality issuers.
More leveraged companies are likely to face greater scrutiny, especially after recent corporate distress and debt restructurings involving dollar bonds, including cases at Braskem, Raízen and Ambipar. More recently, higher leverage at Aegea has also added to uncertainty.
Investment banks had expected a wave of Brazilian issuance early in the year, as companies sought to get ahead of election-related volatility. Those expectations were disrupted by the conflict in Iran, which began in late February, and earlier concerns about rising leverage among issuers.
Milestone
So far this year, in addition to Brazil’s Treasury and Minerva, issuers such as Bradesco, BTG Pactual, FS Bio, Sabesp, Azul and JBS have tapped international markets. Total issuance reached $18.4 billion, including the Treasury deal converted into dollars. In 2025, Brazilian companies raised $34 billion across more than 40 transactions.
Speaking in Washington during meetings of the International Monetary Fund, Finance Minister Dario Durigan called the Treasury’s issuance “historic.” “I committed to advancing the internationalization of Brazil’s public finances, and today we can announce the strong success of this sovereign bond issuance in Europe,” he said.
Last week, Durigan said the Treasury planned to issue bonds in China and Europe later this year. The agency is also monitoring the dollar market.
“We had a very strong and very significant issuance, with demand several times greater than the amount actually sold,” Treasury Executive Secretary Rogério Ceron said on Wednesday.
The Treasury said in a statement that the issuance supports efforts to extend the maturity of public debt, diversify funding sources and broaden the investor base. About 69% of investors came from Europe, 9% from Asia and roughly 13% from Latin America, including Brazil.
“The strong demand, large size and tight spreads show investor confidence in Brazil’s sovereign debt and mark the country’s return to the European market,” the Treasury said.
The Treasury deal was arranged by BBVA, BNP Paribas, Bank of America and UBS BB. Minerva’s issuance involved Bradesco BBI, J.P. Morgan, Morgan Stanley, Bank of America, BB Securities, BBVA, HSBC, Mizuho, MUFG, Rabo Securities, Santander, SMBC Nikko and XP.
*By Rita Azevedo, Fernanda Guimarães, Giordanna Neves and Gabriel Shinohara — São Paulo and Brasília
Source: Valor International
https://valorinternational.globo.com/