Infrastructure Bonds

Ministry of Finance
Economic Policy Secretariat
Infrastructure Bonds
May 2013
Secretaria de Política Econômica
Secretaria de Política Econômica
Funding Alternatives
Private Banks
Banking Syndicate
Corporate
Bonds?
Infrastructure
Project
Development
Banks
Equity
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Secretaria de Política Econômica
Debentures: Average Maturities (Years)
6.3
6.1
5.0
5.2
2010
2011
4.0
2008
2009
2012
Source: ANBIMA .
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Secretaria de Política Econômica
Debentures Profile
93.0%
91.3%
4.9%
DI Linked
Inflation Linked
Apr-12
Source: ANBIMA.
6.4%
0.1%
0.7%
Fixed Rate
2.0%
1.6%
Others
Apr-13
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Secretaria de Política Econômica
Recent Developments in the Corporate Bond Market
(Law 12,431/2011)
Objective:
• To create an alternative source of long-term funding for
companies.
 Financial instruments:
• Infrastructure Bonds: tax breaks (income tax and IOF) applies to
both residents and non-residents (non-tax heaven );
• Capex Bonds: tax breaks (income tax and IOF) applies only to nonresidents (non-tax heaven ).
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Secretaria de Política Econômica
Infrastructure Bonds
(main features)
• Minimum duration: 4 years;
• Fixed interest rate or inflation-linked;
• Proceeds must be invested in infrastructure projects (may also be
used to refinance outstanding debt, or to reimburse previous
expenses incurred up to 24 months prior to the issuance);
• Projects must be qualified as a "priority" by the respective line
ministry.
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Secretaria de Política Econômica
Infrastructure and Capex Bonds
(Fast Facts)
 7 infrastructure bonds and 4 capex bonds have already been
issued (total amount of BRL 5.6 billion).
 Pipeline: 25 infrastrucuture projects in energy and transportation
already considered priority by the Government, with an estimated
amount of BRL 62,8 billion in investment projects.
 Forecast: 10% to 20% of the funding should be provided by
Infrastructure Bonds.
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Secretaria de Política Econômica
LAW 12,431 PROJECT BONDS
(CAPEX and Infrastructure Bonds - Selected Issuances)
Issuer
Issue
Value
Maturity
Date
(R$ million)
(years)
Infrastructure²
15/8/2012
25
17
8.75% + IPCA³
CAPEX¹
15/8/2012
100
12
7.89 + IPCA³
ALL – América Latina Logística Malha Norte S.A.
Infrastructure²
25/9/2012
160
8
10.10%
Railway
Concessionária do Sistema AnhangueraBandeirantes S.A. (Autoban)
Infrastructure²
15/10/2012
135
5
2.71% + IPCA³
Toll Road
CAPEX¹
15/12/2012
420
11
13,49%
Shopping Malls
Concessionária Auto Raposo Tavares S.A.
(CART)
Infrastructure²
15/12/2012
380
12
5.8% + IPCA³
Toll Road
Santo Antônio Energia S.A.
Infrastructure²
27/12/2012
420
10
6.20% + IPCA³
Interligação Elétrica do Madeira
Infrastructure²
18/3/2013
350
12
5.50% + IPCA³
7
3.80% + IPCA³
Concessionária Ecovias dos Imigrantes S.A.
Infrastructure²
15/4/2013
881
Linhas de Transmissão de Montes Claros S.A.
Rio Canoas Energia S.A.
BR Malls Participações S.A.
Bond Type
Yield
Sector
Electric Power
Transmission Line
Hydroelectric
Power Plants
Hydroelectric
Power Plants
Electric Power
Transmission Line
Toll Road
11
4.28% + IPCA³
Sources: Anbima, CETIP, BNDES and line ministries. Elaborated by SPE/M F.
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Secretaria de Política Econômica
Development of Infrastructure Bonds Market
BRL Million
2.000
1.600
AUTOBAN
First issuance distributed
to individuals
(+ than 1,500)
CART
Distribution: First
issuance distributed to
both residents and non
residents (23%)
ECOVIAS
Biggest issuance
Demand 3 times higher than the
offer
Tenor: 12yrs
Tenors: 7yrs and 11 yrs
Yield: 5,80% + IPCA
Yields: 3,80% + IPCA
and 4,20% + IPCA
Tenor: 5yrs
1.200
Yield: 2,71% + IPCA
881
800
400
380
135
0
October 15, 2012.
Source: ANBIMA.
December 15, 2012.
Elaboration: MF/SPE.
April 15, 2013.
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Secretaria de Política Econômica
CART - Infrastructure Bond
Primary Market
Secondary Market
Ranking of the most traded corporate bonds:
1th Position
9th Position
43,34 %
29,48 %
11th Position
25,46%
380,0
114,6
168,5
99,0
December 15, 2012
Jan 2013
Feb 2013
Mar 2013
Issuance - BR$ Millions
Trading Volume - BR$ Millions
Turnover Ratio *
* It is a measure of bond market liquidity that shows the extent of trading in the secondary market relative to the amount of bonds
outstanding.
Source: ANBIMA
Elaboration: Economic Policy Secretariat
Secretaria de Política Econômica
Infrastructure Bonds
(Guarantees for investors)
 Securities that qualify for tax relief are not guaranteed by the
government;
 However, BNDES may share collateral pari passu with investors;
 Moreover, contracts may include cross-default provisions. If an
issuer defaults on its bonds, BNDES can declare early maturity on
that issuer’s debts, to the benefit of all bond investors.
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Secretaria de Política Econômica
Thank You!
[email protected]
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