Proceeds will be used for debt refinancing, sustainability projects, and general corporate purposes
01/30/2025
ESG company Ambipar raised $400 million through a debt issuance in international markets, with demand for its green-labeled bonds exceeding twice the issued volume, reaching $850 million. The waste management company priced the eight-year bonds at 10.87%, slightly below the initial guidance of 11%, according to sources familiar with the transaction.
This is Ambipar’s second bond issuance in international markets. In January 2024, the company raised $750 million, surpassing its initial $500 million target amid strong investor demand. That issuance had a seven-year maturity and was priced at 9.87%, below the initial guidance of 10%.
Ambipar drew less demand compared to other Brazilian companies that recently entered the market. Usiminas and JBS, both frequent issuers, saw investor interest surpass their bond offerings by more than four times.
An investment banker, speaking on condition of anonymity, said Ambipar’s issuance faced challenges compared to other January offerings, attributing this to the company’s credit profile and lower market recognition rather than a shift in investor appetite.
Another person familiar with the matter noted that Ambipar operates in a niche sector with no direct international peers, making it harder for investors to assess its credit profile. However, the company still managed to extend the bond maturity and attract large investors focused on sustainable assets.
Market strategy
Ambipar initially marketed the bonds with a target issuance between $400 million and $500 million (a benchmark-sized offering). The company plans to use the proceeds to repay debt maturing in 2031, refinance other obligations, and fund general corporate purposes. An equivalent amount will also be allocated to sustainability projects.
In a statement, Chief Financial Officer João Arruda said the bond issuance would help Ambipar roll over short-term debt.
“We are very pleased with the outcome of the transaction. The issuance attracted high-quality investors who believe in Ambipar’s future and support our environmental agenda,” he said.
“The bond market offers an eight-year maturity, which is not available in the local market. As a prudent measure, we will use this issuance to refinance Ambipar’s debt due between 2025 and 2028, as well as part of the green notes maturing in 2031. This gives us a solid timeframe to execute our growth, profitability, and efficiency plans, increasing our cash generation and improving our credit profile over time,” Mr. Arruda added.
Fitch Ratings assigned the issuance a BB- rating, citing Ambipar’s strong position in the environmental services sector, growth potential, and geographically diversified revenue streams. However, analysts noted that the company’s high leverage and significant cash flow consumption for interest payments constrained its rating.
Ambipar joins JBS, Bradesco, and Usiminas, which also raised funds in the international bond market in January. JBS issued $1.75 billion, Bradesco secured $750 million, and Usiminas raised $500 million.
Investment banks had anticipated a stronger bond issuance season, but rising volatility in both domestic and international markets led some companies to postpone fundraising plans. The current issuance window is expected to remain open until the second week of February, when companies begin releasing fourth-quarter 2024 earnings results.
Ambipar’s issuance was jointly led by Bank of America, Bradesco BBI, and UBS BB, with settlement scheduled for February 5.
*By Rita Azevedo, Valor — São Paulo
Source: Valor International