Sep 24, 2018

 In total, bonds in the amount of US$ 646.68 million were reacquired

The operation will generate a positive result of US$ 178 million to the Bank

On Friday, 21st the Brazilian Development Bank (BNDES) concluded the tender offer for repurchase of bonds issued on the external market with maturity in 2019 and 2024. In the operation, investors had five days to join the Bank’s proposal.

BNDES repurchased US$ 143.480 million in face value (to the price of 100%) of the bond with maturity in 2019, and US$ 503.2 million in face value (to the price of 95.70%) of the bond with maturity in 2024. In total, bonds with face value worth US$ 646.68 million were repurchased.

In a week, it was possible to reacquire about 40% of the bonds on market whose total (original) offer was US$ 1.64 billion. After the operation, the market value of both bonds (2019 and 2024) was around US$ 500 million, which is considered an appropriate volume (benchmark) on the external market because of its high liquidity.

The implementation of this repurchase operation will produce a very positive financial result, of US$ 178 million, for BNDES — both in terms of capital gain, given the repurchase prices with haircut (gain of US$ 21 million), and financially, given the cancellation of bonds and the consequent extinction of future charges on external debts that will no longer be generated (saving US$ 157 million until 2024).

In addition to the positive financial result of US$ 178 million, the format of the any-and-all tender offer operation (offer for integral repurchase) conveys two important messages from BNDES: first, that the Bank does not agree with the current price level at which these bonds have been traded on the external market; second, the Bank offers other attractive financing alternatives in the local market. 

In the future, BNDES can return to the external bond market, a funding alternative performed since the 1970s, as long as funding is viable on competitive terms for the Bank to support long-term projects. This was the second time that BNDES conducted a tender offer operation of its external bonds. The first, also a success, was in 2015, when BNDES repurchased US$ 634 million in face value.