As we anticipated yesterday, Brazil's Marfrig NBM US Holdings, Inc., has issued a new US$1.0bn bond with a 7.0% coupon priced at US$98.646 to yield 7.25%.
The bond is senior unsecured, rated BB-/BB-, matures 15 May 2026 and is guaranteed by Marfrig Global Foods, S.A., MARB BondCo PLC, Marfrig Holdings (Europe) B.V. and Marfrig Overseas Ltd. It is callable starting 14 May 2022, at US$103.50.
The company has issued the bond as part of its balance sheet management strategy, with the proceeds expected to be used to pay for the outstanding tender offers of the company's 11.25% 2021 bonds and the 8.0% 2023 bonds.
Our 2 May report noted that Marfrig could print as low as 7.125%, not far off the actual yield level and suggesting that demand was strong. The company stated that the issue was c3.0x oversubscribed.
We might see some short-term weakness for Brazilian credits in general, given today's report on March industrial production. Industrial production declined by 1.3% on a mom basis versus expectations of a fall of 0.6%, and declined by 6.1% on a yoy basis versus expectations of 4.7%. However, we remain positive on the company and the sector in the medium and long terms, and believe the new bond is attractive at current levels. It may become even more attractive if the price falls from its issue level of US$98.646.
We have a mix of Buys and Holds on the Marfrig family of bonds.