LEVY & SALOMÃO
A D V O G A D O S
www.levysalomao.com.br
Legal Bulletin
Brazil Bolsters the Market for Debt Instruments through Governance Rules
June 2012
The market for debt instruments in Brazil has seemed relatively shy when compared to the
equities market, which greatly expanded from ten years ago. In an attempt to grow and
attract foreign investors and individuals to the debts market, Anbima, an association of
investment banks and portfolio managers; CVM, Brazil's securities commission; and BNDES,
the federal development bank instituted a certification procedure based on the adoption of
best practices that will provide for more transparent and standardized debt issuances, which
in turn tend to enhance liquidity in the secondary market.
The new rules (named “Código Anbima de Regulação e Melhores Práticas – Novo Mercado
de Renda Fixa”) are intended to give debt issuances a friendlier coating targeting individual
and foreign investors. Amongst the requirements set forth by the Código is the preparation of
a standardized offering memorandum, credit risk ratings updated annually, and reports
issued by CVM-accredited analysts at least during the first year.
Also, debt issuances performed under the Código must be subscribed by at least ten
investors with a maximum of 20% of the offer each (an attempt to incentivize greater
dispersion of such offers) and have a standard issuance price of one thousand reais.
The Anbima certification is available exclusively to issuers that follow at least the Level 1
corporate governance rules of BM&FBovespa, which are stricter than ordinary statutory
requirement governing corporations and promote greater transparency. Some examples of
those rules are the demand of a minimum free float of 25% and the prohibition for the same
person to occupy the positions of CEO and Chairman of the Board of Directors.
At the backdrop of the whole plan to promote the growth of the debt securities market,
according to Anbima, is the assessment that Brazil is short of approximately R$ 280 billion
per year in investment to promote the sustainable growth of its economy. This value
corresponds to 5% of the Brazilian GNP and the plan comes at a pivotal moment when Brazil
needs funding to complete relevant infrastructure projects under way, especially in light of the
upcoming FIFA World Cup and the Olympic Games in Rio de Janeiro. The hope is to address
this investment shortage in a sustainable way, by attracting private investors.
However, measures to incentivize the debt instruments market are yet to show significant
results. Since the launching of Anbima’s certification on October 6, 2011 (amended in March
2012), only two offerings of debt applied for it.
São Paulo
Av. Brig. Faria Lima, 2601
12th floor - 01452-924
São Paulo, SP - Brazil
Phone. +55 11 3555 5000
Rio de Janeiro
Praia de Botafogo, 440
15th floor - 22250-908
Rio de Janeiro, RJ - Brazil
Phone. + 55 21 3503 2000
Brasília
SCN - Quadra 4 - Bloco B
6th floor - 70714-900
Brasília, DF - Brazil
Phone. + 55 61 2109 6070
[email protected]
Daniela Rios
[email protected]