BNDES Offers to Buy Back Dollar Bonds at Discount to Face Value

  • Banco do Brasil last week offered to buy back overseas bonds
  • Slowing credit growth in Brazil means banks need less cash

Brazil’s state-owned development bank, National Bank for Economic and Social Development, offered to buy back as much as $3.75 billion of bonds.

This comes only a week after Banco do Brasil offered to repurchase some $600 million in perpetual notes. BNDES, as the bank is known, offered to buy notes expiring in 2019, 2020 and 2023. The offer expires Nov. 20, according to the bank’s statement.

“These notes are cheap, trading at a discount and it makes sense to buy them back now,” said Carlos Gribel, the Miami-based head of fixed income at Andbanc Brokerage.

Brazil’s longest contraction since the great depression has also caused mid-size banks to buy back their dollar-denominated bonds. At least three Brazilian lenders, including Banco do Estado do Rio Grande do Sul SA, or Banrisul, and Banco Votorantim SA, made tender offers for their overseas debt in the past months as slowing credit growth reduces their financing needs.

The bank offered to pay 95.11 cents per dollar for the 2019 bonds, 97.37 per dollar for the 2020 notes and 93.07 cents for the 2023 bonds.

BNDES is currently the main source of loans for Brazilian companies because if offers lower interest rates than commercial banks. The key lending rate for its $170 billion loan portfolio is 7 percent, below inflation and less than half the central bank’s Selic overnight rate of 14.25 percent.

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