Financial Institution Bond

Jan 1, 2007

Financial Institution Bond

Market Builder

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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