IFC Launches Its First Domestic Amazônia Bond in Brazil to Promote Access to Local Finance for Companies
IFC, a member of the World Bank Group, has launched its first Brazilian reais “Amazônia” bond issue in the Brazilian domestic capital markets to help deepen local markets and promote access to local currency financing for local companies.
The proceeds of IFC’s bond, for an amount of 200 million reais (about $111 million equivalent), will support Brazilian businesses, which in turn help drive economic growth and create jobs.
“We are delighted with the opportunity to contribute to Brazil’s domestic bond market through the Amazônia Bond,” said Nina Shapiro, IFC Vice President, Finance and Treasurer. “The Brazilian capital markets are quite sophisticated, but our bond will add some credit diversity. It will also facilitate further expansion of the fixed-rate domestic bond markets, increasing access to long-term, fixed-rate financing for private companies.”
The IFC reais bond marks the first domestic bond offering in Brazil by a non-Brazilian issuer and should help pave the way for future foreign issuers as well as further development of the domestic fixed-rate bond market. It also represents the first fixed-rate domestic bond offering other than issuances by the government and by BNDES, Brazil’s state-owned development bank.
Farida Khambata, IFC Vice President for Latin America and the Caribbean, Asia, and the Middle East and North Africa, noted, “This bond issue is part of IFC’s broader strategy to deepen local capital markets in Brazil. It builds on our earlier efforts in this area, including support to Bovespa for Novo Mercado, and, most recently, in launching its Sustainability Index, the first of its kind in Latin America.”
Since 1956, IFC has provided over $8.7 billion to support sustainable development of almost 200 private sector companies in Brazil. As of June 2007, the committed portfolio for IFC’s own account in the country totaled $1.6 billion, the Corporation’s largest in Latin America and the Caribbean.
IFC Vice President Nina Shapiro also emphasized that, “The IFC Amazônia Bond fits with the World Bank Group’s goal to support sustainable development of the private sector, which has proved to be an effective engine of growth and development by creating jobs and economic opportunities.”
The Amazônia Bond carries a 11.96 percent rate and has a final maturity date of January 3, 2011. Arrangers for the offering were Banco ABN AMRO Real S.A. (Lead Arranger) and Banco Itau BBA S.A. The issue was 2.5 times oversubscribed and achieved broad distribution, with approximately 20 local investors participating, including pension funds and mutual funds.
IFC’s funding activities focus on two key goals: securing funds to meet IFC’s annual funding requirements on a long-term basis as well as stimulating growth in emerging capital markets by issuing bonds in local currencies. For the fiscal year ending June 30, 2008, IFC has a planned borrowing program of up to $5 billion equivalent. IFC’s long-term debt is rated triple-A by both Standard & Poor’s and Moody’s Investors Service.
IFC has been the first, or among the first, nonresidents to issue in many currencies. These include Colombian pesos, Peruvian soles, Chinese renminbi, CFA West Africa, Greek drachmae, Hong Kong dollars, Malaysian ringgit, Moroccan dirham, Singapore dollars, and Spanish pesetas in the domestic markets; and Czech koruna, Philippine pesos, and Polish zloty in the Eurobond markets.
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