Luana Yoko Vieira Komatsu, Beatriz Sampaio Barros and Carolina Arantes Vieira
Aiming primarily to encourage the use of debentures as a form of project financing in the infrastructure sector, the National Bank for Economic and Social Development (BNDES) announced in August the development of a new instrument named Liquidity Support Facility (Linha de Suporte à Liquidez - LSL). The focus is to optimize the assessment of the credit risk of projects by investors, which today is an obstacle for many projects in Brazil.
The LSL has a budget of approximately R$1 billion, to be used in the payment of infrastructure debenture interest (introduced by Law No. 12,431/2011) in the event of liquidity problems. The instrument enables the company issuing infrastructure bonds to obtain financing of up to two years for interest owed to investors.
In other words, according to the new facility proposed if the issuer does not have the necessary resources before a given date for interest payment, upon being informed of this lack of liquidity, BNDES will pay directly to the debenture holders the amount owed due to interest. In its turn, the issuer will have to refund the amount paid by BNDES in terms and conditions set forth in the agreement of liquidity support facility.
The LSL was inspired by the international form of support for the issue of bonds. According to their governing rules, debentures must meet the following conditions to be able to finance through this facility: (i) to be issued under the Rulings Nos. 400/03 and 476/09 of the Brazilian Securities Commission; (ii) to be issued by a special purpose company (sociedade de propósito específico - SPE), incorporated as a corporation (sociedade anônima); (iii) to aim at raising funds for projects in infrastructure, or at intensive economic production in research, development and innovation areas, considered as a priority in accordance with Article 2 of Law No. 12,431/2011; (iv) to have a minimum period of six (6) years; (iv) to have a risk rating issued by a specialized agency; (v) to have their resources exclusively destined for infrastructure projects; and (vi) to provide for the LSL in the deed of debentures.
The LSL will be used only in projects previously financed by BNDES (especially through FINEM - a facility designed for long-term project financing). In addition, the projects must be tied to infrastructure SPEs and the entrepreneurs′ equity interest in the funding sources must be of at least 20%, or the holding companies must hold 100% of the capital of the SPEs. Moreover, the companies to benefit from the LSL must perform activities in the logistics and transportation, urban mobility, energy or basic sanitation sectors.
Furthermore, according to information provided by BNDES, funding under the LSL must have a due date prior to, or coinciding with, FINEM, compensation at a market rate exceeding the debentures′ yield, a provision on the sharing of guarantees with FINEM and cross-default clause in relation to other operations of the issuer with BNDES.
Given the current infrastructure scenario in the country, and the constant discussions about the risks for potential investors, the creation of LSL may represent an alternative to facilitate project financing through the issue of debentures, thus contributing towards the development of the sector.
