Brazilian meat processors hit by Europe debt woes
Borrowing costs for Brazilian beef producers Marfrig Alimentos SA and Minerva SA are rising twice as fast as for the rest of the nation's companies as Europe's financial crisis drives investors away from indebted issuers.
Yields on bonds sold by Sao Paulo-based Marfrig, the world's fourth-largest meatpacker, and Minerva, a Barretos-based beef processor, rose more than 180 basis points, or 1.8 percentage points, relative to Treasuries last month, according to reports.
Credit-rating downgrades in Spain, Portugal and Greece are driving up yields on speculation importers will fail to raise financing, hurting sales of Brazilian meat. Marfrig got 32% of its revenue from Europe in the quarter ended in September. Europe accounts for less than 10% of Minerva's total sales.
The ability of Marfrig and Minerva to weather the global recession should give investors confidence, Matuo said. Brazilian beef processor Independencia SA sought bankruptcy protection from creditors in the US in March 2009 after exports tumbled.
The beef sector is one that is most exposed to external factors. Brazilian beef company bonds may slump should European demand fall and spark a decline in meat prices, analysts said, adding that there are a lot of uncertainties and the outcome is not clear.
