Retail Debt Program – Tesouro Direto
David Athayde
Investor Relations Office
Brasília
June-2013
Main Features
Guidelines
» Launched in 2002, as a partnership between the Treasury and BM&FBovespa (stock
exchange)
» Treasury: in charge of bond offering and pricing
» BM&Fbovespa: responsible for the electronic system that supports the negotiations
through Tesouro Direto
» Objectives (from the Treasury point of view):
» To offer another savings product alternative
» To increase the investors base
» Didactic purposes – transparency and financial education
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Main Features
Characteristics
» Interned Based
» Individuals need one agent (bank or broker) to link them into the system, but the decision over the
portfolio composition is theirs.
» Minimum/Maximum amount per operation:
» Min: Regular Purchases: 10% of a bond unit => around US$ 35 / Programmed : around US$ 15
» Max: US$ 500,000
» Offers regular government securities through the internet
» Uses roughly the same on-the-run instruments for debt roll-over
» One exception tailored for retailers: Zero-coupon inflation-linked bonds
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Main Features
Characteristics
» Consulting the system
» The system can be accessed for consulting purposes 24 hours a day, 7 days a week
» Buying Bonds
» It is possible to buy Bonds on weekdays, weekends and holidays
» Except from 5am to 9am on weekdays – system maintenance
» Selling Bonds to the Brazilian Treasury
» The selling of Bonds to the Brazilian Treasury can be done every Wednesday – at market prices
» Weekly liquidity
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Advantages
Competitive Costs
» Financial Institution Fee (vary a lot, some have zero fee) – from 0 to 1%per year.
» Custody Fee (BM&FBovespa – Brazilian Stock Exchange) – 0.3% per year.
» Investment Funds usually have higher fees, which are inversely proportional to the volume
available for investment (low-income investors pay more)
» As the investor is responsible for his portfolio allocation, there are no costs related to the asset
manager role.
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Advantages
Flexibility – Customized Portfolio
» Maturities range from 2 to 40 years
» Three types of bonds: fixed rate / inflation-linked / floating rate
» Two available flows:
» LTN, LFT and NTN-B Principal: the principal and interests are paid only when the bond is
redeemed;
» NTN-B and NTN-F: there are also semi-annual coupon payments.
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List of Bonds Offered
Available Prices and Rates
Security
Maturity
Rate(p.y.)
ASK
Unitary Price
BID
ASK
BID
Inflation (CPI) Linked
NTNB Principal
150519
15/05/2019
3,74% -
R$ 1.812,02 -
NTNB 150820
15/08/2020
3,78% -
R$ 2.598,45 -
NTNB Principal
150824
15/08/2024
4,09% -
R$ 1.438,68 -
NTNB 150535
15/05/2035
4,23% -
R$ 2.882,62 -
NTNB Principal
150535
15/05/2035
4,35% -
R$ 886,35 -
NTNB 150850
15/08/2050
4,40% -
R$ 2.939,24 -
Fixed Rate
LTN 010116
01/01/2016
9,12% -
R$ 784,98 -
LTN 010117
01/01/2017
9,43% -
R$ 711,97 -
NTNF 010123
01/01/2023
9,79% -
R$ 1.036,38 -
07/03/2017
-0,03% -
R$ 5.541,15 -
Floating Rate (Selic)
LFT 070317
As of: 25-Apr-2013 14:20:56
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Advantages
Simple Purchase Procedure
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Purchase Procedure
Clearing Process
» After the purchase is confirmed, a protocol number and the payment due date are displayed.
» The financial resources should be made available to the Custodian on the week day that
follows the purchase date.
» The investor is responsible for :
» Contacting the Custodian to obtain its banking details
» Transferring the money to the appropriate account
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Advantages
Safety
» Public bonds usually are the safest financial investment in a country
» Once purchased, the bond is registered as a property of the investor
» If the financial institution goes bankrupt, the investor just have to transfer his bonds to
another institution.
Competitive Returns
» Lower Costs
» Considering the declining trend of interest rates in Brazil, investors can guarantee an high yield
bond for a long period.
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Taxation
IOF and Withholding
» The securities offered at Tesouro Direto are subject to the same taxes of any fixed Income
investments:
» The regressive IOF tax (for investments below 30 days)
» Withholding tax :
» 22.5% up to 180 days;
» 20.0% from 181 to 360 days;
» 17.5% from 361 to 720 days;
» 15.0% above 720 days.
» The withholding tax is only charged at the moment of selling, previous redemption and when
the bond have coupon payments – semi-annually.
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Fees
BM&FBovespa and the Financial Institution
» BM&FBOVESPA charges 0.30% per year over the total value of the stock
» Each financial institution has a different fee:
» This fee is freely agreed with the investor
» Induce market competition
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Recent Developments
Improvements
» Home-Broker integration
» Investor can operate through his financial institution’s web site
» Cost Reduction
» There was also a negotiation fee that was abolished
» “Scheduled Sales”
» Periodical purchase and sales programming
» Re-investment
» Incentive to retailers
» Fee draw-backs conditional on performance
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Recent Numbers
# of Operations by Financial Volume – Mar 13
Sales by Maturity – Mar 13
31.8%
19.6%
12.5%
> 10years
1-5 years
28,4%
46,2%
12.5%
7.7%
5.0% 4.4%
3.7% 2.6%
500 k a 1
M
100 to
500 k
50 to 100
k
10 to 50 k
5 to 10 k
4 to 5 k
3 to 4 k
2 to 3 k
1 to 2 k
Up to 1 k
0.2%
5-10 years
25,4%
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Recent Numbers
Outstanding – Mar 13
Selic
8.8%
Fixed
23.8%
Inflation
67.4%
Total = R$ 9.5 bn / US$ 4.8 bn
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Recent Numbers
Return – Feb 13
Bond
Maturity
Gross Return
In February
In the Year
In 12 Months
LTN
1/1/2016
0.28%
-0.30%
14.78%
LTN
1/1/2017
-0.06%
-
-
NTN-F
1/1/2023
-1.48%
-1.56%
-
NTN-B
8/15/2020
0.33%
-1.01%
18.94%
NTN-B
5/15/2035
-3.00%
-2.01%
23.73%
NTN-B
8/15/2050
-6.01%
-5.68%
-
NTN-B Principal
5/15/2019
0.15%
-
-
NTN-B Principal
8/15/2024
-1.02%
-2.27%
25.10%
NTN-B Principal
5/15/2035
-6.25%
-2.61%
32.78%
3/7/2017
0.43%
1.57%
7.39%
LFT
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Recent Numbers
Enrolled Investors
350,000
12,000
342,092
330,000
10,000
310,000
8,000
290,000
287,273
6,000
270,000
4,496
4,042
4,000
250,000
Monthly Variation (RHS)
Total
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
2,000
Feb-12
230,000
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Cross-Country Comparison
Share of Retail Investors through TD is not Representative (% of Overall Debt)
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17
16
15
14
12
10
8
6
05
4
2
01
01
0
Brazil
USA
Sweden
Ireland
UK
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Looking Ahead
Great Increase Potential
» Computers base-> 99 mn (2012)
» 1 Computer out of 2 inhabitants
» 94 mn internet users
» 71.43% of households have Internet
» E-commerce traded R$22.5 bn in 2012
» Internet Banking -> 42 mn people in 2011.
» 24% of banking transactions
» 15.7 bn transactions
» 46% of active accounts
» 572 thousand investors with homebroker (2012)
» 15% of BM&FBOVESPA trades
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Looking Ahead
Main Challenges
» Work on distribution channels
» Banks are not interested in selling Tesouro Direto bonds. They prefer to sell their own
financial products, through which they raise capital. Tesouro Direto only gives operational
fees.
» Identify the investor needs
» The Treasury is hiring a survey company in order to understand the main difficulties faced
by the potential investors.
» Invest on advertising and financial education
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For additional information access the National Treasury website:
https://www.tesouro.fazenda.gov.br/en
Or contact Institutional Relations area:
[email protected]
The information on this presentation is issued by the Brazilian Debt Management Office (DMO) for informational purposes. It does not contain and is not an invitation or offer to buy or sell securities.
Translation of the original text of this document is provided only for the convenience of the reader. While reasonable care has been taken to ensure the authenticity of the translation, its accuracy cannot be
guaranteed. Reliance upon this translation shall be at the reader's own risk. Under no circumstances, shall the Brazilian National Treasury, its officers, employees or agents be liable to the reader or anyone else for
any inaccuracy, error, inconsistency, omission, deletion, defect or alteration of the content of the translation from the original Portuguese text, regardless of cause, or for any damages resulting therefore. The
original Portuguese text of this document is the only official version, which can be found in http://www.stn.fazenda.gov.br/index.asp. In the event of any discrepancy or contradiction between the Portuguese and
translated version, the Portuguese version shall prevail.
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