The Latin American perpetual bond craze shows no signs of abating, with several borrowers issuing deals at the end of January.
Cosan, a Brazilian sugar and alcohol manufacturer, launched a $350 million perpetual non-call five-year at the end of last month. Another Brazilian company, Vicunha, a textile and steel group, is also working on a perpetual deal – a $475 million non-call five. This transaction was originally scheduled to be launched last year but was postponed after interest sagged following last October’s market correction.
These deals follow a hugely successful $500 million perpetual non-call five-year bond from Banco do Brasil, which was priced last month. The deal attracted more than $4 billion-worth of orders, allowing the lead manager to raise the transaction’s size from its original $300 million. Pricing was also tightened on the back of the strong demand as the deal demonstrated that investor appetite for this type of structure remains big. The bond carried a record low rate of 7.95%. The deal counts as upper tier 2 capital until new Brazilian regulations are approved and it moves into the tier 1 category.
Latin American perpetual bonds are targeted mostly at yield-hungry Asian retail investors, usually through private banks that buy the bonds directly.