Uruguay and Embraer raised $1.95 billion in the US bond market. Uruguay sold $1.2 billion of 12-year bonds, while Embraer issued $650 million of 10-year notes. Both deals were heavily oversubscribed, indicating strong investor demand. Proceeds will be used for liability management and corporate needs.
On Thursday, the Republic of Uruguay and Brazilian manufacturer Embraer accessed the US bond market, raising a total of $1.95 billion for liability management. Uruguay issued $1.2 billion of 12-year bonds, achieving oversubscription of 4.2 times, while Embraer sold $650 million in 10-year notes, oversubscribed by 8.5 times.
The Uruguayan government priced the 2037 bonds to yield 5.442%, which is 100 basis points above US Treasuries. Initial pricing discussions began at about 135 basis points, with the final guidance set at around 105 basis points. The offering drew up to $5 billion in orders, facilitated by joint bookrunners BBVA, Citi, and JPMorgan.
Uruguay, now the third Latin American sovereign to enter the international market this year, announced a tender offer for its outstanding 2027 and 2030 global bonds. It priced repurchase offers at $999 and $982.30 for every $1,000 in principal for the respective notes.
Meanwhile, Embraer priced its new 2035 notes at 99.688% with a yield of 6.022%, or 158 basis points over US Treasuries. Initial pricing discussions began at 190 basis points, with final guidance set at around 160 basis points. Demand for Embraer’s bonds reached $5.5 billion.
Global coordinators for Embraer’s offering included Citi, Goldman Sachs, JPMorgan, Morgan Stanley, and PNC Bank. The funds raised will be used for a tender offer on its 2027 and 2028 bonds, along with general corporate expenditures. Embraer last issued international bonds in July 2023, totaling $750 million.
In recent months, Latin American countries, particularly Uruguay, have been active in the international bond market, seeking to manage liabilities effectively. These bond issuances reflect a trend where sovereign and corporate entities capitalize on favorable market conditions and investor interest. Market participants often evaluate these transactions based on yield spreads over US Treasuries, which serve as a benchmark for assessing the risk and return associated with the investments.
Uruguay and Embraer’s successful bond issuances demonstrate strong investor demand and highlight ongoing interest in Latin American markets. With Uruguay’s strategic liability management initiatives and Embraer’s funding plans for corporate operations, both entities are positioned to optimize their financial strategies effectively. The oversubscription rates signify the confidence investors have in the creditworthiness of these issuers.
Original Source: latinfinance.com
