• Twitter
  • Facebook
  • LinkedIn
  • English English English en
  • Português Português Portuguese (Brazil) pt-br
Murray Advogados
  • Home
  • The Firm
  • Areas
    • More…
      • Probate and Family Law
      • Capital Stock
      • Internet & Electronic Trade
      • Life Sciences
      • Capital and Financial Market Banking Law
      • Media e Entertainment
      • Mining
      • Intellectual Property
      • Telecommunications Law and Policy
      • Visas
    • Arbitration
    • Adminstrative Law
    • Environmental Law
    • Civil Law
    • Trade Law
    • Consumer Law
    • Sports Law
    • Market and Antitrust Law
    • Real Estate Law
    • International Law and Foreign Trade
    • Corporate Law
    • Labor Law
    • Tax Law
    • Power, Oil and Gas
  • Members
  • News
  • Links
  • Contact
    • Contact Us
    • Careers
  • Search
  • Menu Menu
Murray News

Brazilian companies resort once again to syndicated loans

After a weak start of the year, syndicated loans have once again become an option for well-rated Brazilian companies to raise funds abroad.

In the beginning of the year, with the bond market heated, companies preferred to issue securities, with which they could raise funds for a longer term. But as political uncertainty grew, with President Michel Temer being directly cited as involved in corruption in the testimonies of JBS executives, costs on the bond market rose a little and foreign bank loans have become attractive again.

Vale raised $2 billion in early June with a five-year credit facility. The mining company got it from a syndicate comprising 18 banks. In May, sugar and ethanol producer Biosev also rolled over a $318 million facility that was to expire in 2018 and extended it through 2020.

In the first quarter, syndicated loans to Brazilian companies amounted to $50 million, but with the new transactions the market expectation is to top the total of about $4 billion posted last year.

ING participated this year of the extension of a syndicated loan to Ascenty, an operator of data centers, in the first quarter. Last year, the company raised $155 million from a group of banks, and this year it managed to increase that facility to $190 million, maturing in five years, with two banks joining the loan. Proceeds will be raised for the construction of data centers in Brazil.

The bank also arranged in May the extension of a syndicated loan to another Brazilian company in the value of $200 million for three years. In general, terms of syndicated loans are shorter than those of bond issues and similar to those in Brazil. “The difference is that the banking market in Brazil is too concentrated. If the company needs to raise more than $1 billion, it may be cheaper to do the transaction abroad, where a higher number of banks can participate. But this access is restricted to a small universe of blue-chip companies,” says Ignacio Lorenzo, head of syndicated loans and financing for acquisitions at Santander Brasil.

When Brazil lost its investment-grade rating, traditional banks that used to participate in such type of loan reduced the credit limit to Brazil. In addition, the recession of the last two years reduced the need of Brazilian companies to raise new funds, and they are seeking only to roll over their existing debts. To have an idea of the drop in loans on this market, in 2015 syndicated loans to Brazilian companies reached $15 billion.

Mr. Canineu says banks have been seeking to reduce the so-called Brazil risk. The focus now has been on loans to subsidiaries of multinationals present in the country, Brazilian companies with operations abroad or exporters, or those in non-cyclical businesses, such as paper and pulp and food and beverages, which are less affected by the crisis.

Outside of these sectors, banks are more demanding regarding collateral. In the case of companies being investigated, but without operating problems, like meat processor JBS, banks have only been renewing the facilities and have included creditor-protection clauses that accelerate the debt, pegged to leniency agreements. “There are no new loans to these companies, at most the rollover of existing lines. But these transactions have been bilateral,” one executive says.

With high liquidity in the global financial market and interest rates that, despite rising, are still lower than in Brazil, fundraising abroad is still attractive for some Brazilian companies, even considering the cost of currency hedge.

In general, syndicated loans are contracts at a cost of Libor, the London interbank rate, which is below 2%, plus a spread, which depends on the country and company risk. “In general, if you do a three-year swap transaction of Libor to reais it still is cheaper than the [benchmark short-term rate] CDI,” says Mr. Canineu, with ING.

Source: Valor Econômico

27 de June de 2017/by Gelcy Bueno
Tags: bond market, credit limit, investments, political uncertainty, syndicated loans
Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on LinkedIn
  • Share by Mail

Pesquisa

Posts Recentes

  • Drugmakers ask São Paulo government to review medicine price rises
  • Muffato buys 16 properties, 11 gas stations from Makro
  • Producer wants trucks to use more biodiesel
  • Americanas explores ways to maintain operations
  • Healthcare industry braces for harsh year

Arquivos

  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
© Copyright 2022 Murray Advogados – PLG International Lawyers - Support Webgui Design
  • Twitter
  • Facebook
  • LinkedIn
Brazilian companies still lack compliance departments BNDES shares collateral with banks to boost credit for infrastructure
Scroll to top