Standardization Of Debentures In Brazil

To encourage the issuing and trading of debentures in the domestic market, the Brazilian Association of Entities of the Financial and Capital Markets (Associação Brasileira das Entidades dos Mercados Financeiros e de Capitais - ANBIMA) developed a proposal for standardization of the deeds of these assets.

The initiative sets parameters for the order and the drafting of the provisions, in addition to suggesting some calculation patterns.

The set of suggestions are described in the form of guidance and a model of deed, whose membership is voluntary. The guidance contains the guidelines for the preparation of the deed of debenture. The model of deed reproduces the features and sequence of information that the document should contain to follow the recommendations of good practice. The idea is to induce the issuers and coordinators of offers to use the proposed model, which does not interfere in the negotiation features of the assets, as term and profitability, for example.

The standardization is an effective way to promote the increase of transparency and liquidity of the assets in the secondary market, strengthening the domestic fixed income segment and providing direct benefits for issuers and investors.

The benefits of standardization are: (i) more agility to develop and analyze the deeds; (ii) reduction of time and costs for structuring and distribution of supply, market exposure and placement; (iii) make it easier to access information, comparing assets and provide for early redemption and prepayment clauses; and (iv) improvement in asset pricing process through unified calculation criteria.

The standardization process is voluntary, and should be stimulated by the institutions associated to ANBIMA as a model of best practice.

In practice minimum parameters are defined for deeds to offers of debentures distributed with ample or restricted efforts, pursuant to the provisions of ICVM 400 and ICVM 476, respectively[1]. These parameters refer to forms of writing and homogenization of the ordering of clauses, the standardization of calculation and consolidation of amendments to the original deed.

ANBIMA proposes a common ordering of the clauses of the deeds and with predefined sequence for easy access and comparability of information for investors.

In the case of assets with total optional early redemption or partial special depreciation minimum time limits are defined: 18 months or 40% of the total term of the asset, whichever is greater.

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