Bradesco’s acquisitions over the past few years have brought it closer to overtaking government-controlled Banco do Brasil (BB) as the number one export financer.
BB held 23% of this market last year, up from 21% the year before. But the federal giant does not expect to grow its market share this year, according to the bank’s international funding manager Delcio Blasser.
Meanwhile, Bradesco’s market share has already grown from 20.5% at the end of 2002, to 22% this year to date. “We will have no problem reaching 23% market share this year,” Lembi says.
BB raised US$120mn in seven-year bonds recently and later obtained a US$35mn one-year loan from Panama-based trade bank Bladex. Meanwhile, Bradesco has received a US$180mn one-year syndicated loan led by the IFC and the Inter American Development Bank (IADB), and is now preparing its own long-term bond placement.
For an emerging market bank to obtain long-term funding the operation needs to be structured to give investors more guarantees. BB chose to guarantee repayment by giving investors rights to its foreign trade inflows.
This kind of operation is usually rated BBB by Moody’s Investor Services and interest rates are 450-460 basis points over Libor, Lembi de Farias says.
Bradesco is negotiating a credit risk guarantee with an international insurer to get an AAA rating and interest rates of about 300 basis points over Libor in a seven-year placement with a two-year grace period, he adds.
“These operations are time-consuming and costly. But it’s a trade-off. The insurance policy will get the spread reduced by one third,” he says.
Lembi de Faria does not disclose the name of the insurer but says it will be one of the major international credit guarantee underwriters, such as MBIA, Excell and Acer.
This year the bank’s bond issues will likely reach US$1bn or more, he adds.