Standard Bank Group could seal by year-end the first sale of Brazil's corporate debt denominated in South Africa's currency, as the appetite grows for high-yielding assets from one of the world's fastest-growing major economies, a senior banker said.
Johannesburg-based Standard is currently assessing the right timeframe for a sale of the rand-denominated bonds, said Fernando Negri, the bank's chief executive in Brazil. Potential buyers of the securities could include South African pension funds, insurance companies and other long-term investors.
Negri, who did not disclose the names of potential candidates, said issuers might include companies in Brazil's natural resources, power and infrastructure industries, as well as financial institutions.
Borrowing in rand "remains an uncharted territory for Brazilian borrowers; it's a slow process," Negri said at an interview in his office late on Thursday. Standard's plan is an example of growing capital flows and trade ties among emerging market nations as economies in the developed world struggle. Brazil's government has made so-called "South-South relations" a priority in recent years, encouraging local companies to expand in emerging economies from Latin America to Africa and the Middle East.
By issuing rand bonds, Brazilian corporations would have the opportunity to tap a new pool of investors at yields lower than in domestic markets. Much like global bonds denominated in Brazilian reais, debt in rand has been a hit among investors seeking to boost returns with high-yield securities.
Maturities could preferably be longer than five years, Negri said. South Africa's central bank on Thursday left its benchmark lending rate unchanged at 5.5 percent, while its Brazilian counterpart raised its Selic rate on Wednesday for a fifth time this year to 12.50 percent. Brazil has the highest inflation-adjusted borrowing costs of the world's 20 biggest economies.
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