BNDES repurchase bonds abroad

In less than a week, two companies, the Brazilian Development Bank (BNDES) and Banco do Brasil (BB), announced the repurchase of bonds abroad through a financial transaction known as “tender offer”. In this scenario, the companies repurchase the global bonds for a price a little bit over the market price. Since the securities values negotiated at the aftermarket are already low because of the investor uncertainty with the political and economical instability, the companies can repurchase them for a good price and reduce the debt in dollar.

Yesterday, BNDES informed the investors that will repurchase three global bonds maturities which circulating value can reach US$ 3.75 billion. BB had already informed the repurchased of US$ 600 million, in the past week. “These operations show that the bonds are cheaper. The institution that repurchase the titles at a discounted price is making a good deal”, says Cid Oliveira, director of international fixed income at XP Gestão.

The BNDES offer will end on Friday, at 11:59, by New York Time, but it can be extended if the bank chooses the deadline extension. The total bonds amount that can be purchased has not been determined yet. BNDES plans to pay up to US$ 951.10 for every US$ 1,000 in principal value of bonds with maturity in 2019 and pay an interest of 4% per year to the creditors. For titles with maturity in 2020, the payment will be US$ 973.70 for every US$ 1,000 in principal value and pay an interest of 5.5% per year. Titles with maturity in 2023 will have a repurchase value of US$ 930.70 for every US$ 1,000 in principal value and pay an interest 5.75% per year.

Banco do Brasil will repurchase two series of perpetual bonds that pay 9% and 9.25% of interest per year. The bank will also repurchase titles with maturity in 2022. The repurchase offer, which expires on December 9, will have the early tender date in November 24.

Over the last two months, another five companies announced the repurchase of up to US$ 800 million in bonds. For the next five years, the global maturity will reach US$ 155 billion.