Dec 23, 2014

• Operational policies focus on priorities and expand use of market rates

The Brazilian Development Bank (BNDES) carried out a comprehensive revision of its operational policies. The Bank’s aim is to offer the best conditions concerning rates, terms and level of participation for priority sectors. At the same time, the BNDES is enhancing the use of market indexers in its financing and providing more room for other sources so they can also work with long-term financing.

Among the sectors to receive financing with more favorable rates are innovation, infrastructure, renewable energy, public transport, waterway and railway transport, sanitation and improvements to public administration. Environmental projects and social investments from companies will also benefit from these better conditions. In such financing, the financial cost benchmark is the Long-term Interest Rate (TJLP), which rose from 5% p.a. to 5.5% p.a. as per a decision made by the National Monetary Council (CMN).

Micro, small and medium-sized enterprises (MSMEs) are still the priority with both TJLP-indexed financing and the best credit access conditions. MSMEs, regardless of the sector, will now receive support under one across-the-board condition: 100% of TJLP and 70% participation.

For other sectors, the BNDES reserves a portion of the financing in TJLP, by combining it with market rates. Therefore, the Bank will be able to maintain solid support for Brazilian companies, sustaining and improving investments, while remaining in compliance with government guidelines to rationalize resources.

By reducing its levels of participation and the portion of financing in TJLP, the BNDES will be stimulating the market to play a lartger role in granting long-term credit, an agenda that has been a focus for some time. Even reducing the portion of financing in TJLP, the new Operational Policy ensures that there will be no shortage of resources for the BNDES to finance investments, using amounts based on market costs.

PSI – Extended to December 31, 2015, the Investment Maintenance Program (PSI) interest rates were increased, although they still remain competitive enough. PSI rates, previously ranging from 4% to 8% p.a., will now stay between 6.5% and 11% p.a. The measure is in keeping with the government’s tax adjustment plan as it provides stimulus to investment.

Created in mid-2009 among several other anti-cyclical measures to overcome international crises, the PSI is mainly intended to finance the acquisition of machinery, equipment, buses, trucks and innovation projects.