Iron-ore pellet exporter, Sam Marco, might end the long drought of Brazilian securitizations, in a deal rumored to be for around $150 million. BNP Paribas will be the arranger and Duff & Phelps Credit Rating Co. will rate the transaction BBB-minus.
Sam Marco first approached the ABS market in 1996 and is now seeking to refinance some of its debt. Though the deal is good news for the Brazilian market it might not mark the beginning of a wave of deals for the country.
The main reason for Brazil’s sluggish ABS market is the devaluation of the real in 1999. Exporters benefited from the weakened currency and have had no need to access the securitization market.
“Traditional ABS issuers such as Aracruz Celulose and CVRD are sitting on a lot of cash,” explained Sam Fox, analyst at DCR in New York. “As a result, they have no incentive to risk their name and the cost of funding by coming to the market. However, any deal that closes adjusts the mood of investors that deals can get done and primes the pump.”