Fri May 16, 2014 12:16pm EDT


Bradesco BBI, the wholesale and investment banking unit of Brazil’s Banco Bradesco SA (BBDC4.SA), was one of four banks advising Ford Motor Credit Co on the sale of securities. The notes are backed by a revolving pool of prime retail sales contracts secured by new and used vehicles originated in the United States by Ford Credit.

The transaction, which was initially $750 million, was the first in which a Brazilian investment bank acted as a bookrunner and lead manager for a sale of an ABS in the world’s largest bond market. Bradesco advised Ford Credit in similar deals over the past three years.

The deal is the result of heavy investment by Bradesco and other Brazilian banks to hone their ability to offer and place securities to investors around the world. Bradesco has topped local and global bond underwriting league tables for the past two years, while Itaú BBA SA and Grupo BTG Pactual SA took the biggest slice of investment banking fees in Brazil in the same period.

“This deal is key to our strategy, which is not only developing the ability to originate a product but also being able to place it to any type of investor around the world,” said Renato Ejnisman, managing director of Bradesco BBI’s investment banking unit. “Don’t be surprised if in a few years Brazilian banks are capable of handling a global issue on their own.”

The bank is in talks with several U.S. and European companies for similar deals, Ejnisman said, without elaborating.


The sale comes as spreads, or how much extra yield an issuer has to pay relative to U.S. benchmark rates, for some asset-backed securities tightened in April. Yields for U.S. transport sector ABS deals narrowed more than in other segments, according to Barclays Plc data.

The deal allowed Ford Credit to raise money from investors without having to increase the liability side of its balance sheet, said Leandro Miranda de Araújo, Bradesco BBI’s head of debt capital markets. He noted that demand for the securities was so strong that the deal was upsized and a subordinated portion was also offered to investors.

“We showed that we are in a position to lead any plain vanilla or structured transaction for non-Brazilian issuers that want to sell corporate credit risk or receivables to dedicated U.S. investors or global investors,” Araújo said.

Investors placed $4 billion worth of bids for the Ford Credit securities. A first, $1 billion portion of five-year senior notes rated ‘AAA’ was sold at a yield of 0.52 percentage points over the five-year mid-swaps rate. Initial price guidance was for spread between 0.55 points and 0.60 points.

A second, $40 million subordinated portion was sold at a yield of 0.65 points above the five-year mid-swaps rate. Another $40 million subordinated portion of the issuance remained with Ford Credit, Araújo said.

In addition to Bradesco BBI, Ford Credit hired the investment banking units of Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N) and SMBC Nikko Securities Inc to help with the deal.