Financial Institution Bond
Banco do Brasil's $500 million perpetual was the first
Brazilian issue to comply with Tier 2 hybrid capital
requirements. It got a Basket B assignment from Moody's, which
categorized 25% of the structure as equity and was the first
perpetual priced through 8%. The non-cumulative junior
subordinated deal for Brazil's largest public sector-owned bank
is LatinFinance's Best Financial Institution Bond.
Though largely forgotten in the flood of Brazilian issuance
that followed, the transaction marked a number of firsts. For
Carlos Andre, head of international capital markets and
financial institutions at Banco do Brasil, it was the first to
be recognized by Brazil's Central Bank as hybrid capital. The
structure gives Banco do Brasil the flexibility to classify the
securities as either Tier 1 or Tier 2 capital. This was
important because the bank had reached its 50% threshold for
Tier 2 capital, and could...
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