HG bonds: JBS subsidiaries place $2B offering for refinancing; terms

Brazilian meat processor JBS SA, via its subsidiaries, late yesterday completed a $2 billion, two-part offering of senior notes, primarily backing refinancing efforts. This morning, the new bonds leaned tighter from the initial pricing spreads, trade data show.

On Nov. 16, subsidiary JBS Finance Luxembourg Sarl placed $1 billion of 2.50% five-year notes due Jan. 15, 2027, at T+145. The new issue changed hands today at T+142-146, and at a weighted average of T+143, according to MarketAxess.

Proceeds from the 2027 notes will be used for general corporate purposes, including short-term debt repayment.

Also yesterday, subsidiaries JBS USA Lux SA, JBS USA Food Co. and JBS USA Finance Inc. printed $1 billion of 3% 10-year notes due May 15, 2032, at T+150. That issue traded today at T+145-150, and at a weighted average T+146, trade data show.

The new 2032 notes are sustainability-linked and will be used to refinance debt, extend debt maturities and lower the cost of debt.

Yesterday, S&P Global Ratings assigned BB+ grades to both new tranches, in line with the company's subinvestment grade BB+ issuer credit rating. In August, Ratings revised the outlook to positive from stable. "The positive outlook reflects that we could upgrade JBS in the next 12-18 months if the company shows commitment to keeping leverage low despite its growing appetite for acquisitions and larger shareholders' remuneration, amid continued improvements in governance," the agency said at the time.

Earlier this year, Moody's and Fitch triggered rising star upgrades to parent JBS and its subsidiaries.

On Nov. 5, Moody's upgraded its rating for JBS and its subsidiaries to Baa3 from Ba1, resulting in a stable outlook. "The upgrade of JBS's ratings is supported by the continued strong operating performance, and better than anticipated results in 2021, which supports strong cash flow generation and allows the company to pursue its strategy of acquisitions, shareholder remuneration and share buyback with no material impact on leverage and liquidity," Moody's said Nov. 5.

In June, Fitch upgraded its rating for JBS to BBB– from BB+. The outlook is stable. The ratings actions reflected the company's "strong business profile, low leverage, strong liquidity and positive FCF generation, favorable debt amortizing profile, track record of access to the international market."

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