BNDES to Offer Notes for Petrobras Capex

Brazil’s development bank, the BNDES, is in the process of setting up a new program to issue up to BRL25bn in government notes, proceeds of which are to be used by Petrobras. The program is backed by a new federal law that allows the development bank to issue new securities alongside Brazil’s treasury in a typical government bond auction process, according to a BNDES official. BNDES then takes the notes, which sit on its balance sheet, and transfer them to Petrobras in exchange for a credit spread. As such they sit on both sides of BNDES’ balance sheet – as a liability it has with Treasury and an asset with Petrobras. The latter can then sell the notes to investment banks, which in turn will offer them to institutional investors. It will use proceeds for its capex program. Details on the terms of the notes to be offered and the length of the program are still being worked out, says the official. The law governing the program is Lei 11,948, which was passed in June.