Odebrecht Diversification Drive To Dull World Cup Hangover
BMI View: We expect Brazilian construction company Odebrecht to continue to successfully diversify outside of Brazil as the World Cup project boom dissipates. Peru, Central America and Africa are all expected to shore up the order book.
Odebrecht, Brazil's largest construction company, has been one of the biggest beneficiaries of the World Cup build up. Whereas construction companies from the host countries of other sporting tournaments have entered periods of weak growth following the completion of tournament projects, we believe that Odebrecht should emerge stronger, as the company continues to expand successfully outside Brazil.
In support of its expansion plans, the company has issued USD6.5bn in debt since 2010 through Odebrecht Offshore Drilling Finance and Odebrecht Finance Limited, to support all areas of the business. The company has seen the cost of its debt come down, with falling bond yields over recent months indicating investors view the diversification and expansion strategy positively. In July 2013, the company launched one of the biggest bond issuances in Brazil in 2013, raising USD1.69bn, with a coupon of 6.75%; the bond is currently trading with a yield of 5.035%.
|Diversifying As Domestic Market Concerns Grow|
|Odebrecht Offshore Drilling And Brazil Government Bond Yields, %|