Brazil's Itau Unibanco, one of the country's two largest financial institutions, is expected to come to the market with a two-tranche issue, likely to be printed through Itau Unibanco Holdings (ITAU).
Tranche A is expected to be "benchmark size", three-year, senior unsecured bonds due 24 January 2023 (Ba3/BB-/BB); initial price guidance has been set in the 3.2% area. The bank has US$1.87bn 5.125% subordinated bonds (Ba3/NR/B+) due 2023, which trade at cUS$106.806 (ALLQ) to yield c2.95% (g-spread 137bps; z-spread 134bps). Given the senior characteristic of the senior unsecured new bonds relative to the currently outstanding subordinated 2023s, we believe the price guidance is too generous; final pricing should be tighter than where the subordinated bonds currently trade. We believe this tranche could price at c2.9%.
Tranche B is also expected to be "benchmark size" bonds, this time five-year senior unsecured bonds due 24 January 2025 (Ba3/BB-/BB); initial price guidance is in the 3.5% area. The closest reference in terms of maturity is the subordinated issue mentioned above. Based on its trading levels, we believe the new 2025s could price at c3.25%.
Pricing is expected today.