Flash Fixed Income Report /

Brazil's Suzano: New issue looks fairly priced

    Rafael Elias
    Rafael Elias

    Director, Latin America Credit

    Tellimer Research
    22 May 2019
    Published by

    Suzano Austria GmbH, a special-purpose vehicle (SPV) wholly owned by Brazil's Suzano Papel e Celulosa, one of the country's largest pulp and paper companies, came to the bond market with a two-tranche transaction:

    • Tranche A: Consisted of a "benchmark-sized" (US$1.0bn) new 10-year issue launched at T+275 bps after initial price talk was T+ 300 bps, which was shortly changed to a guidance level of T+280 (+/- 5).
    • Tranche B: A "benchmark-sized" re-tap (US$250mn added to the outstanding US$1.0bn, 7.0% bonds due 2047 (BBB-/BBB-) that currently trade at cUS$111.41 (ALLQ) to yield c6.14% (G-Spread 335 bps; Z-Spread 361 bps). Initial price talk was T+355 bps, which shortly after changed to guidance of T+ 345 (+/- 5) and it was eventually priced at T+340 bps.

    These bonds were well received by the market given the high quality of the company, its well-developed bond curve that makes it a household name for portfolios with Brazilian holdings, and because of a small spread pick up over the currently outstanding bonds (in the case of the re-tap). 

    We consider both tranches to have been priced fairly although they might tighten a few basis points in the secondary market depending on allocations.