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Samarco bonds tumble on possible debt talks

Reuters - UK Focus

By Paul Kilby

NEW YORK, June 21 (IFR) - Bonds issued by Samarco fell four points on Tuesday following news that the Brazilian mining company has hired banks to approach creditors about possible debt negotiations.

The company's 2023s and 2024s were being quoted at around 42.00-44.00 on Tuesday after trading on Monday at around 47.00, according to traders.

Samarco, a joint venture between mining giants Vale and BHP Billiton, has seen its bonds whipsaw ever since a dam collapse in November 2015 caused what the Brazilian government described as the country's worst-ever environmental disaster.

The 2023s fell from a mid-market price of 90.50 on November 5, the day of the disaster, to a low of around 32.00 late last year, according to Reuters data.

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Since then, bond prices have recovered a touch amid hopes that the company can start operations again.

A US$5.7bn civil suit against Samarco was dropped this month, but it still faces a US$43bn suit filed by Brazilian public prosecutors, according to CreditSights.

BHP Billiton (NYSE: BBL - news) has hired Rothschild & Co (Frankfurt: 13F.F - news) , while Vale has brought in Moelis & Co and JP Morgan to sound out creditors, Reuters reported on Monday.

Proposals to bondholders have yet to be drawn up, as any discussions will depend on whether or not Samarco can re-open the site, sources told Reuters. (Reporting by Paul Kilby; Editing by Marc Carnegie)