Sep 26, 2013

• Issuance of US$ 2.5 billion had the lowest average cost in the Bank's history

The Brazilian Development Bank (BNDES) raised US$ 2.5 billion by issuing corporate bonds on the international market. The issuance was held in two series with maturity for September 2016 and 2023, resulting in interest paid to the investor of 3.375% p.a.,and 5.75% p.a. respectively. The rate represents gains of 275 and 300 basis points over the United States’ Treasury bond.

The average cost of the operation, 4.56%, was the lowest ever paid by the Bank in a dollar issuance, with much higher demand than the value offered to the market. Approximately 400 investors have participated in setting the price of the bonds (bookbuilding), surpassing the US$ 11.5 billion in orders. This was the largest order of all international fundraising operations ever carried out by the Bank, and one of the largest among Brazilian issuers.

The high demand has resulted in a wide variety of bonds for buyers from different countries and investment profiles. Thus, it was possible for the BNDES to access the market, paying one of the lowest new issue premiums on its bonds traded on the secondary market.

Prior to the operation, which was conducted by Deutsche Bank, Itaú BBA and JP Morgan, there had been a series of meetings with international investors in June, in New York, Boston, Los Angeles and London. This strategy made it possible to announce and price the operation in a single day.  

The fundraising marked the return of the BNDES to the US market after being absent for more than three years. Before this,, the last time the Bank issued a bond denominated in US dollars was in 2010.  It was also the first time the Bank held an operation in two series, allowing access to a broader investor base, meeting not only the demand for 10-year bonds, a common market in US dollars, but also reaching investors seeking shorter deadlines.

The operation allowed the Bank to build a new reference in interest rates for its foreign debts, adding two new points to its curve, which now matures in 2016, 2017, 2018, 2019, 2020 and 2023.

The success of the issuance consolidates the BNDES’ presence in the international market.  Since 2008, the Bank has held three fundraising operations in dollar in the amount of $ 1 billion each, one in the EUR market in the amount of € 750 million, and another in the amount of 200 million Swiss francs.

In addition, the result demonstrates that, despite the recent increase in uncertainties in the international scenery, the market is still open for emerging-country issuers with high quality international credit and could pave the way for other Brazilian issuers to hold fundraising operations.