Put Fernanda Lazzarini and Andre Jerusalem  – 13/5/2020

In response to the crisis caused by COVID-19 and with the aim of increasing the liquidity of credit, financing and investment companies, also known simply as “financial companies”, Resolution No. 4,812 of April 30, 2020 of the National Monetary Council (“CMN”), expanded the list of institutions that can issue Bank Deposit Certificates (“CDBs”) provided for in Resolution No. 3,454 of May 30, 2007, as well as other fundraising instruments that said companies may use. In addition to CDBs, according to said resolution, the other instruments are:

I – interbank deposit;

II – term deposit with special guarantee;

III – bill of exchange;

IV – Agribusiness Letter of Credit (LCA);

V – Financial Letter (LF);

VI – Guaranteed Real Estate Letter (LIG);

VII – repurchase agreement; and

VIII – bank deposit receipt.

As a result of this new resolution, the issuance of CDBs, which was previously restricted to banks, is now also permitted for financial companies, which are smaller companies and more sensitive to the crisis.

In general terms, CDBs are fixed-income investment securities issued by certain financial institutions, through which the investor deposits an amount for a certain period (term) in exchange for a remuneration (interest), which is often linked to the DI rate. Additionally, one of the great advantages of said security is the security for the investor that the Credit Guarantee Fund guarantees the payment of said securities up to the amount of R$250,000.00 (two hundred and fifty thousand reais) per CPF and per institution issuing the security.

The Mazzucco & Mello Advogados team is aware of the measures announced by the Government and its agencies and is available to assist our clients in finding options that benefit their businesses.