Brazil’s BMG tender unattractive for investors, JPMorgan says

Guillermo Parra-Bernal – Reuters, 9/8/2015

Banco BMG SA’s offer to repurchase global subordinated bonds due in 2019 and 2020 appears unattractive relative to current prices of the securities, JPMorgan Securities said on Tuesday, putting into question the feasibility of the plan under current terms.

In a client note, JPMorgan analyst Natalia Corfield said the buyback plan was long expected in the wake of BMG’s decision last year to transfer its payroll lending business to a joint venture with Itaú Unibanco Holding SA, Brazil’s largest bank by market value.

Under terms of the planned transaction, BMG is offering 94.5 cents on the U.S. dollar for the 9.95 percent bond due in Nov. 2019 at the Sept. 21 early bird date, and 91.5 cents for the 8.875 percent bond due in Aug. 2020 . Investors who do not tender by that date will get 91.5 cents for the 2019 bonds and 88.5 cents for 2020s.

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