For long-term financing and investments in all segments of the Brazilian economy, the BNDES has several funding sources, presented in the chart below, not including non-borrowing liabilities:
Source: Presentation to the Press – Funding sources
Government sources, such as the Worker Support Fund (Fundo de Amparo ao Trabalhador – FAT), the National Treasury and the Merchant Marine Fund (Fundo da Marinha Mercante – FMM), account for a significant share of the BNDES’s funding structure, with 72.8% of the funding sources on September 30, 2022 (73.9% on June 30, 2022), not including operating liabilities in this calculation.
Resources from other government funds – such as the Government Severance Indemnity Fund (Fundo de Garantia do Tempo de Serviço – FGTS), foreign funding – via multilateral organisms or issuance of bonds and private issuances of Financial Bills – complete the BNDES’s capital structure.
Below is an overview of the BNDES’s main funding sources as of September 30, 2022:
FAT is a special accounting and financial fund that, according to the Federal Constitution, has at least 28% of its funds allocated to the BNDES to finance economic development programs. FAT represents the Bank’s main source of funds.
The funds raised through this constitutional provision are identified as “Constitutional FAT” and are remunerated by the long-term interest rate (TJLP) (operations contracted by December 31, 2017), the long-term (TLP) (operations as of 2018) or international market interest rates (export financing). The funds not invested in financing operations are remunerated by the average Selic rate less 0.09% p.a.
Although resources may be requested by the Fund if there are insufficient resources to pay mandatory expenses, the principal is not expected to be returned to the FAT. There is only the monthly payment of interest on non-invested funds and the semi-annual payment on invested funds. Due to these characteristics, the Constitutional FAT balance is considered as subordinated debt and part of it is included in the calculation of the BNDES’ Reference Equity. However, through CMN Resolution 4,679, of December 31, 2018, subsequently replaced by CMN Resolution 4,851, of August 27, 2020, the amount related to FAT recognized in the Tier II Capital of the Reference Equity was limited to the amount recorded on June 30, 2018, with a schedule of gradual reduction of 10% per year, starting January 1, 2020, until its complete exclusion in 2029.
In addition to constitutional transfers, the BNDES raises FAT surplus funds in the form of special deposits, called “FAT Special Deposits”, allocated to specific programs and sectors, previously determined and approved by the Executive Secretariat of FAT’s Decision-making Body. These funds are currently remunerated by the TLP, as of the release of the loans to the final beneficiaries. The funds not yet released to the financial beneficiaries will be remunerated by the same criteria applied to the National Treasury’s cash and cash equivalents, currently, the Selic rate.
The balance of FAT funds totaled R$364.4 billion on September 30, 2022. Of this total, R$358.6 billion corresponded to Constitutional FAT and R$5.8 billion to FAT Special Deposits. During the 3Q2022, R$5.5 billion was raised from Constitutional FAT.
For more information, see Notes 11.1 and 11.2 of the BNDES’s Financial Statements in BRGAAP.
On September 30, 2022, obligations to the National Treasury totaled R$93.0 billion, equivalent to 14.1% of the BNDES’s funding sources (15.7% on June 30, 2022), not including operating liabilities in this calculation.
Of this total, R$9.2 billion (9.9%) corresponds to instruments eligible to core capital (Instrumentos Elegíveis a Capital Principal – IECP), which make up the Reference Equity and whose remuneration is linked to factors such as the existence of accounting profit and the amount of dividends paid to the shareholder. The remaining R$83.8 billion (90.1%) corresponds to onlending operations.
From January to September 2022, the BNDES settled R$27.3 billion of its liabilities with the National Treasury in advance. Of this total, R$ 13.3 billion refer to Instruments Eligible for Tier I Capital – IECPs.
Learn more about funding and investment of National Treasury funds.
For more information, see Notes 10.1.c and 19.2.3 of the BNDES’s Financial Statements in BRGAAP.
The purpose of the Merchant Marine Fund is to provide funds for the development of the national merchant marine and the construction of auxiliary and hydrographic or oceanographic ships for the Brazilian Navy, aiming to meet the needs and safety of waterway transportation.
On September 30, 2022, FMM funds available through the BNDES and investments in financing operations with BNDES risk reached R$22.3 billion, as per Note 10.1.c of the BNDES’s Financial Statements in BRGAAP.
The BNDES has historically raised funds through government funds in the search for alternative sources of funds to support long-term investment projects.
On September 30, 2022, the total balance of other government sources was R$13.5 billion, whose most significant balances are described below.
Government Severance Indemnity Fund Investment Fund (Fundo de investimento do Fundo de Garantia do Tempo de Serviço – FI-FGTS)
In December 2008, the BNDES carried out the private issuance of 700,000 debentures through exclusive subscription by FI-FGTS, represented by its administrator, Caixa Econômica Federal. The debentures yield 6% p.a. and are due in October 2029.
The funds raised were allocated to investments in construction, renovation, expansion or implementation of infrastructure projects in roads, ports, waterways, railroads, energy, sanitation and airports.
On September 30, 2022, the balance of funds totaled R$0.8 billion, as per Note 14.1 of the BNDES’s Financial Statements in BRGAAP.
Government Severance Indemnity Fund (Fundo de Garantia do Tempo de Serviço – FGTS)
In 2008, the BNDES acquired, through financing, federal government bonds from FGTS to pay dividends and interest on equity to the National Treasury for fiscal years 2006 and 2007.
The loan is adjusted by the Reference Rate (Taxa Referencial – TR) and an interest rate of 4.8628%, and it is due in December 2026.
On September 30, 2022, the balance of funds totaled R$1.6 billion, as per Note 10.1.a of the BNDES’s Financial Statements in BRGAAP.
In 2018, the BNDES issued its first Financial Bills, as part of the strategy to develop new market funding instruments, complementing the traditional sources of funds, to meet the needs of its investment budget and future disbursements.
The operation also aimed to diversify the investor base and progressively prepare the Bank to act as a more frequent issuer in the local market. Two issuances were made in May and December 2018, with a two-year maturity, and were amortized in late 2020.
In October 2020, the BNDES raised funds with the issuance of Green Financial Bills, which were used to finance projects with these principles. This issuance, fully carried out in the Brazilian domestic market, has a two-year maturity at CDI + 0.45% per year.
On September 30, 2022, the balance totaled R$1.2 billion, as per Note 14.2 of the BNDES’s Financial Statements in BRGAAP.
BNDES’s Green Financial Bills Reports
The BNDES’s 2021 Green Financial Bills Report covers the entire allocation of funds to eligible projects and features information regarding energy generation and carbon emission reduction of the projects, as well as their geographic location.
Since 2022, it has also published information regarding energy generation and carbon emission reduction of the projects, as well as the respective UN Sustainable Development Goals. Monitor the indicators of the BNDES’s Green Financial Bills
Sustainability Bond Framework
In addition to diversifying and complementing funding sources, foreign funding enables risk dilution, encourages other Brazilian issuers and strengthens the relationship with the international financial community.
The BNDES has raised funds in the international market through bond issuances since 1953 and through loans from multilateral institutions, government agencies and other institutions since 1972.
The bonds issued by the BNDES have fixed interest rates that are determined by a bookbuilding process and principal amortization in a single installment.
On September 30, 2022, the balance of liabilities related to bond issues totaled R$8.3 billion. No new bonds were issued during the 3Q2022.
The table below presents the issuance date, the amount, the coupon and the maturity date of the BNDES’s latest foreign bonds.
|Year of issue||Value (Million Currency)||Coupon||Due date|
|2008(a)||US$ 1.000||6,37%||16.06.2018 (a)|
BNDES’s Green Bond Reports
The BNDES’s 2018 Green Bond Annual Report covers the entire allocation of funds to eligible projects and features information regarding energy generation and carbon emission reduction of the projects, as well as the respective UN Sustainable Development Goals.
Since 2019, it has also published information regarding energy generation and carbon emission reduction of the projects, as well as the respective UN Sustainable Development Goals. Monitor the indicators of the BNDES’s Green Bonds
Sustainability Bond Framework
Funding from multilateral institutions and government agencies is carried out with partner institutions such as the Inter-American Development Bank (IDB), Japan Bank for International Cooperation (JBIC), Kreditanstalt für Wiederaufbau (KfW), Nordic Investment Bank (NIB), China Development Bank (CDB), Agence Française de Développement (AFD), Swedish Export Credit Corporation (SEK) and Instituto de Crédito Oficial (ICO).
The balance of loans from multilateral institutions and government agencies totaled R$20.7 billion on September 30, 2022.
On September 30, 2022, equity totaled R$137.0 billion, reflecting the net profit of R$9.6 billion in the third quarter, offset by negative equity valuation adjustment (R$1.9 billion).
For more information, see Note 18 of the BNDES’s Financial Statements in BRGAAP.
The Agribusiness Letters of Credit (LCA) are credit bonds issued by public or private financial institutions that grant pledge rights on the agribusiness credit rights attached to them.
The BNDES auctions LCAs through accredited financial institutions on electronic trading platforms. By acquiring LCAs from the BNDES, holders will be adhering and bound to all the provisions contained in the Regulation Applicable to the Issuance of Agribusiness Letters of Credit – LCA of the BNDES.
The Regulation is is available here.
The Notes of the BNDES System are available here.
Last update: September 12, 2023