Brazil

Financial services firm XP, which Moody’s describes as aiming to “disrupt the business model of incumbent banking institutions in Brazil”, is meeting fixed income investors ahead of a potential debut international bond issue 18 months after it priced an IPO on the Nasdaq stock exchange.

Braskem, the Brazilian petrochemicals company downgraded to junk last year, will use cash to repurchase over $230m of bonds as it reduces its debt ratio to regain investment grade status.

Latin America bond market participants saw signs this week that risk appetite is waning, with recent deals under par in secondary markets. Added to a more hawkish stance from the US Federal Reserve, bankers and investors expect issuance from the region to slow.

Brazilian food company BRF said on Wednesday that it is giving bondholders more time to participate in a tender offer for a portion of its global bonds maturing in 2030.

Light, the fifth largest energy distributor in Brazil, issued $600m of five year bonds on Tuesday to wrap up a hectic period of LatAm high yield issuance. But the primary market is likely to take at least a one day pause as recent issues trade softly and the US Federal Open Market Committee (FOMC) concludes a two day meeting on Wednesday.

Brazilian meatpacker JBS made an apparently impressive entry into the world of ESG debt last week with a well received sustainability-linked bond (SLB). While an SLB is an encouraging first step for a company that has for years been under the scrutiny of environmental campaigners, the KPIs in the deal cover a fraction of the company’s emissions, and the deal shows investors need be tougher on SLB issuers if the format is to have value.

Credit Suisse has hired from a European rival to lead its Brazil DCM efforts as it edges up the LatAm bookrunner league tables.

StoneCo, the Brazilian financial technology firm, debuted in international bond markets on Friday with a seven year benchmark that it will partially use to finance an investment in digital bank Banco Inter.

Brazilian airline Azul on Thursday sold the first triple-C rated new issue from Latin America since the coronavirus pandemic began, pricing a five year bond inside guidance to as investors swarm all over the region’s riskier credits.

The nascent sustainability-linked bond (SLB) faced a big test this week with deals from the oil, power and steel sectors, and most notably from Brazil meat processor, JBS. But if the enthusiastic reception to the deals suggested the market passed with flying colours, there were calls for more scrutiny of the relevance of KPIs if the SLB label is to mean anything. Oliver West reports.

Light, the fifth largest energy distributor in Brazil, began investor calls on Wednesday ahead of a proposed five year non-call three deal that it will use to redeem its only international bond. The company joins a long line-up of LatAm companies preparing to issue, with the strong pipeline likely to translate into new supply as soon as Thursday.

Bankers working on Brazilian meatpacker JBS’s $1bn sustainability-linked bond on Tuesday said that ESG funds had been responsible for some of the largest orders in the controversial company’s deal, as corporate borrowers in some of the least green sectors join the ESG debt carnival.