Pimco Is Said to Buy New Bonds Issued by Andrade Gutierrez

(Bloomberg) -- Pacific Investment Management Co. is buying a new $540 million bond from Andrade Gutierrez SA, giving one of Brazil’s biggest construction companies enough money to meet a debt payment missed last week, said one person familiar to the matter.

The Belo Horizonte-based builder will probably receive the funds on May 9 and use the proceeds to pay back creditors who are still awaiting $345 million from a bond maturity on April 30, the person said, asking not to be identified because the discussions are private. Andrade Gutierrez and Newport Beach, California-based Pimco declined to comment.

Andrade Gutierrez published a filing last Friday which said the board authorized the sale of $540 million in international bonds due 2021 paying up to 13.5 percent in annual interest. The bonds will be backed by the shares of CCR SA, a company which Andrade Gutierrez has a 14.6 percent stake in. CCR manages airports and highways in Brazil and some of the shares owned by Andrade Gutierrez are already pledged as collateral on some banking loans.

About three years since the so-called Carwash corruption investigation first roiled Brazil’s construction industry, bonds issued before the scandal are now coming due and squeezing builders that are struggling with lost business and looming debt maturities. Odebrecht, the iconic builder which spread its pay-to-play bribery practices across Latin America, missed a debt payment last month and continues to negotiate with banks to secure new loans.

Andrade Gutierrez’s bonds that matured last week jumped on Monday, rebounding nearly 19 percent to trade at 95 cents on the dollar, according to Trace pricing. Last week, Andrade Gutierrez was downgraded by Fitch Ratings to “restricted default.”

©2018 Bloomberg L.P.