(Adds comments from bankers, details on strategy)
By Guillermo Parra-Bernal
SAO PAULO May 16 Brazilian investment bank
Bradesco BBI SA extended its push into the U.S. debt market on
Friday by clinching a double role as joint-lead manager and
bookrunner of a $1.04 billion sale of asset-backed securities by
Ford Motor Co's finance unit.
Bradesco BBI, the wholesale and investment banking unit of
Brazil's Banco Bradesco SA, was one of four banks
advising Ford Motor Credit Co on the sale of securities. The
notes are backed by a revolving pool of prime retail sales
contracts secured by new and used vehicles originated in the
United States by Ford Credit.
The transaction, which was initially $750 million, was the
first in which a Brazilian investment bank acted as a bookrunner
and lead manager for a sale of an ABS in the world's largest
bond market. Bradesco advised Ford Credit in similar deals over
the past three years.
The deal is the result of heavy investment by Bradesco and
other Brazilian banks to hone their ability to offer and place
securities to investors around the world. Bradesco has topped
local and global bond underwriting league tables for the past
two years, while Itaú BBA SA and Grupo BTG Pactual SA took the
biggest slice of investment banking fees in Brazil in the same
"This deal is key to our strategy, which is not only
developing the ability to originate a product but also being
able to place it to any type of investor around the world," said
Renato Ejnisman, managing director of Bradesco BBI's investment
banking unit. "Don't be surprised if in a few years Brazilian
banks are capable of handling a global issue on their own."
The bank is in talks with several U.S. and European
companies for similar deals, Ejnisman said, without elaborating.
The sale comes as spreads, or how much extra yield an issuer
has to pay relative to U.S. benchmark rates, for some
asset-backed securities tightened in April. Yields for U.S.
transport sector ABS deals narrowed more than in other segments,
according to Barclays Plc data.
The deal allowed Ford Credit to raise money from investors
without having to increase the liability side of its balance
sheet, said Leandro Miranda de Araújo, Bradesco BBI's head of
debt capital markets. He noted that demand for the securities
was so strong that the deal was upsized and a subordinated
portion was also offered to investors.
"We showed that we are in a position to lead any plain
vanilla or structured transaction for non-Brazilian issuers that
want to sell corporate credit risk or receivables to dedicated
U.S. investors or global investors," Araújo said.
Investors placed $4 billion worth of bids for the Ford
Credit securities. A first, $1 billion portion of five-year
senior notes rated 'AAA' was sold at a yield of 0.52 percentage
points over the five-year mid-swaps rate. Initial price guidance
was for spread between 0.55 points and 0.60 points.
A second, $40 million subordinated portion was sold at a
yield of 0.65 points above the five-year mid-swaps rate. Another
$40 million subordinated portion of the issuance remained with
Ford Credit, Araújo said.
In addition to Bradesco BBI, Ford Credit hired the
investment banking units of Bank of America Corp,
JPMorgan Chase & Co and SMBC Nikko Securities Inc to
help with the deal.
(Editing by Todd Benson and Tom Brown)