Latam raised $1.4 billion with the issuance of a five-year bond that will be used to prepay debts, extend maturity, and reduce costs.
The issuance came at a yield of 7.857%, a reduction from the initial price talks. When the offer was announced this morning, the company had indicated a ‘low-to-mid 8%’ rate – around 8.25% to 8.5%.
“At the peak of the bookbuilding, demand reached $7.4 billion,” said a source involved in the operation. “The company initially aimed to raise $1.2 billion, but due to the demand and price level achieved, it decided to increase the volume by $200 million.”
The transaction attracted 270 investors – including hedge funds, credit funds, insurers, and pension funds – and 15 orders of over $100 million.
“At the final price, the book saw a decrease, but no one backed out because of that. On the contrary, some funds had to stay out because there was no more room,” said the source.
Latam will use the funds to prepay debts, including a term loan facility due in 2027 with a much higher double-digit cost.
This is the first time Latam accesses the international debt market since exiting Chapter 11 in 2022.
Since then, the company has shown significant operational improvement. In the first half of this year, Latam had a net profit of around $400 million, compared to a loss of nearly $1 billion in the same period of 2022.
The success of the offer comes amid high demand for yield in the international market, aided by the start of the Fed’s interest rate cut cycle and the fact that credit funds are flush with cash, looking to allocate before the American elections.
Last month, several Brazilian companies took advantage of this opportunity, including Eletrobras, Petrobras, and Suzano.
“With the beginning of the interest rate cut cycle, the American interest rate curve profile also changed, which has helped,” said a source. “Previously, the short-term curve was higher than the long-term one. So it didn’t make sense to take risks. With the cut, the long curve returned to be higher than the short one.”
The offer was coordinated by Citi (lead), Santander, JP Morgan, and Deutsche Bank.
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Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
