The board of Marfrig Global Foods SA, Brazil's No. 2 meatpacker, on Tuesday approved the repurchase of up to $701.3 million in global bonds due between 2018 and 2021, the latest effort by a Brazilian company to buy back debt in the wake of a slumping currency and rising borrowing costs.
The São Paulo-based company's board authorized management to make an all-cash tender for the outstanding $51.3 million worth of 11.25 percent senior bonds issued by a European subsidiary and maturing in September 2021, according to a securities filing.
The board also approved the repurchase of $500 million worth of global debt maturing in 2018, 2019 and 2020, which could be increased by an additional $150 million under undisclosed conditions. Coupon rates for these senior, dollar-denominated bonds range from 6.875 percent to 9.50 percent, the filing said.
For many Brazilian banks and companies, long-term dollar-denominated funding has turned expensive after a 35 percent drop in the real this year stoked hedging costs. Brazilian markets are going through their worst rout in 13 years on concerns that slowing Chinese growth and escalating political turmoil may lead the country to lose its investment-grade rating by next year.
Marfrig, which has struggled in recent years with a heavy debt burden despite robust beef and processed food sales, hired the investment banking units of Banco do Brasil SA, Banco Bradesco SA, HSBC Holdings Plc and Morgan Stanley & Co to manage the debt buyback.