In a significant financial move, the Republic of Uruguay and Brazilian aircraft manufacturer Embraer secured substantial funding through the US bond market on Thursday. The combined effort raised a total of $1.95 billion for liability management. Uruguay issued 12-year bonds worth $1.2 billion, while Embraer introduced 10-year notes totaling $650 million. Both deals were met with overwhelming demand, being oversubscribed by factors of 4.2 and 8.5 times respectively.
Details of the Financial Transactions
In the heart of the bustling financial markets, Uruguay successfully launched its 12-year bonds valued at $1.2 billion. These bonds were priced at par to yield 5.442%, which is 100 basis points over US Treasuries. Initially, the price talk was set around 135 basis points before narrowing down to approximately 105 basis points. BBVA, Citi, and JPMorgan acted as joint bookrunners, attracting an impressive $5 billion in orders. Earlier in the day, Uruguay also announced a repurchase offer for portions of its existing 2027 and 2030 global bonds, setting redemption prices at $999 and $982.30 per $1,000 in principal, respectively.
Meanwhile, São Paulo-based Embraer also made headlines by issuing new 10-year notes worth $650 million. Priced at 99.688 to yield 6.022%, or 158 basis points over US Treasuries, these bonds saw initial price talks around 190 basis points before settling at about 160 basis points. The offering drew significant interest, reaching peak demand of $5.5 billion. Leading the coordination were Citi, Goldman Sachs, JPMorgan, Morgan Stanley, and PNC Bank, working alongside Bank of America, Bradesco BBI, Crédit Agricole, and Santander as joint bookrunners. Embraer plans to use the funds for a tender offer on its 2027 and 2028 global bonds and for general corporate purposes.
Uruguay's successful bond issuance marks it as the third Latin American country to tap into the international market this year, following Mexico and Chile's placements in US dollars and euros last month. Previously, Uruguay had raised ¥46.3 billion ($309 million) in a multi-part deal in the Japanese market in December. Embraer's last international bond issuance occurred in July 2023, when it printed $750 million worth of seven-year bonds to fund a buyback.
From a journalistic perspective, these transactions highlight the robust confidence investors have in both Uruguay and Embraer. The substantial oversubscription rates underscore the attractiveness of their offerings in the current economic climate. This success not only strengthens their financial positions but also sets a positive precedent for future capital market activities in Latin America.
