Debuting in a market long tapped by its peers, Brazil's Banco Santander and related entity Banco do Estado de Sao Paulo (Banespa) issued a $400 million, seven-year deal last week backed by current and future diversified payment rights (DPRs). Led by Merrill Lynch, the transaction priced at 5.73%, yielding a spread of 235 basis points over five-year Treasurys, according to a source close to the deal. Moody's Investors Service, Standard & Poor's, and Fitch Ratings rated the deal Baa1'/'BBB'/'BBB+', respectively. Pricing was on Sept. 13; settlement is set for Sept. 20.
For the ratings category and asset type, both the yield and spread were unusually compressed, hitting the tightest ever for financial future flows out of Brazil, according to one source. Indeed, the deal priced inside every future flows deal from the country tracked by ASR over the last two years. "There's an aggressive bid right now in the U.S. market," said a source on the transaction, "The bank has a good reputation and took advantage of conditions."