Braskem's hybrid bond issue postponed

There was an initial expectation from banks to price the bonds yesterday

The pricing of Braskem's subordinated hybrid security is set for next week.

According to sources, the company seeks investors to anchor the bonds, and is still trying to reach an agreement with the market on the remuneration of the notes.

There was an initial expectation from banks to price the bonds yesterday. Initially, in presentation meetings, Braskem signalled that it intended to sell the notes at around 7%. The investors consulted, however, are insisting on 8.5%-9%. The size of the transaction will be defined by the rate. The amount initially proposed is between $500 million and $1 billion, which could increase depending on demand.

According to Lucror Analytics, the issuance of the notes, considered by ratings agencies as “half debt, half equity”, should reduce the company's current leverage from 5.8x, to between 5.6x and 5.3x, depending on the size of the notes.

If the size of the notes stays at $500 million, the company should focus on paying off short-term debt, which is more expensive. If it reaches $1 billion, it could open the possibility for Braskem to offer a US$500 million perpetual bond repurchase. By Lucror's calculations, a rate of 8.5% is the minimum that investors should consider to keep the notes, while 8.75% “may be closer to fair value ”.

By Ana Paula Ragazzi