Feb 9, 2015
The Brazilian Development Bank (BNDES) is expanding its financing alternatives to acquire capital goods. The Bank will adopt a new fixed-interest rate, at current market values, to complement financing under the BNDES’ Investment Maintenance Program (PSI).
The new fixed-interest rate will be adjusted monthly and may allow the BNDES’ financing participation to increase to 90% in bus and truck buying operations, in addition to the BNDES’ Procaminhoneiro Program (which finances vehicles for self-employed truck drivers).
The BNDES’ PSI program finances the purchase of locally-manufactured capital goods at fixed rates. The financing limit using the program’s rates is 50% (for large companies) and 70% of the value of the good (for smaller companies). Clients, however, can finance up to 90% of that value, complementing the PSI rate with market rates. The novelty is that the BNDES is allowing its clients the option to also cover the amount that exceeds the 50% or 70% with a fixed rate, at market costs.
The fixed interest rate will be applied to the amount of credit that refers to the increased participation of the Bank, i.e., it will specifically apply to the credit not covered by the PSI. With this new mechanism, the BNDES offers its clients an alternative way to complement credit at fixed market rates, allowing borrowers to better predict the final cost of operations.
The fixed rates for February are 17.24% per year for micro, small and medium-sized enterprises (MSMEs) and 15.74% for other companies. However, the financing cost advantage in the credit composition (PSI + fixed interest rate) for MSMEs will be maintained, since the BNDES’ participation in financing with interest rates subsidized by the PSI is larger for these companies.
The BNDES sent official circulars to financial agents advising them of the change. The new instrument is already available and is initially adopted when acquiring buses and trucks, as well as in the BNDES’ Procaminhoneiro program. At a second stage, this benefit will be extended to financing for other capital goods under the BNDES’ PSI program.
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