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Financing incentives Norway - Brazil

Financing incentives Norway - Brazil. 17 February 2010 Bergen Manifestasjon Bergen Arne-Christian Haukeland. Agenda. DnB NOR's international competence in Bergen Framework for financing in Brazil Financing Brazilian built vessels – new regulations

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Financing incentives Norway - Brazil

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  1. Financing incentives Norway - Brazil 17 February 2010 Bergen Manifestasjon Bergen Arne-Christian Haukeland

  2. Agenda DnB NOR's international competence in Bergen Framework for financing in Brazil Financing Brazilian built vessels – new regulations Long term financing for other projects – various alternatives Commercial banking facilities in Brazil

  3. DnB NOR in Bergen Emerging Markets group in Bergen 2 teams Asia and Eastern Europe Latin America, Middle East, Africa 7 associates with extensive experience in the field of Trade Finance ECA financing Market knowledge International banking relationships Shipping department Offshore supply 18 associates Seafood Global Seafood team headed from Bergen 11 associates

  4. DnB NOR – International Presence DnB NOR offers reliability, long-term commitment

  5. Framework for financing in Brazil Only BRL allowed in Brazil, with few exceptions Brazilian companies can only hold foreign currency accounts abroad for a limited time CELIC currently at 8,75 % Limited but increasing knowledge of "Norwegian" industries in Brazilian banks Strong drive on local content in all areas Possible thin capitalisation rule coming

  6. Good financial incentives in Brazil- Merchant Marine Fund Created in 1958 Purpose: to finance the yard & shipping industry Funding source: tax on freight charged on imports (lately also directly from Ministry of Finance) FMM is part of the Ministry of Transportation Three agents for the fund: BNDES, Banco do Brasil Banco do Nordoeste

  7. FMM financing scheme – the new framework Application has to be filed with one of the agents no later than 90 days after approval

  8. BNDES has various options for other projects BNDES FAT (workers fund) TJLP + sector spread + margin TJLP currently at 6 % Approx 8-11% depending on sector and company BRL All applicants must be rated by BNDES BNDES Exim Financing Brazilian capital goods exports Terms Up to 100% of value Up to 12 years Libor + margin (case by case) Used by Petrobras, Embraer etc BNDES Finem Oil & gas development, production Terms 60-70 % (up to 80% in BRL) TJLP + sector spread + margin Sector spread oil & gas 1.3%-1.8% Complicated regulations

  9. Local financing alternatives Lender Local currency Initial Exchange Local Bank USD Initial Exchange Loan in local currency payable in USD FX at fixing Delivers USD Offshore Delivers local currency Local counterparty Local Bank Graph shows payment mechanism at the beginning of the transaction • At inception, the Lender grants a local currency loan payable in USD to its local counterparty and hedges local currency exposure via cross currency swap with Local Bank (swap provider). • The Lender delivers USD to Local Bank which are converted to local currency at fixing and deposited into the local counterparty’s account. • On each coupon payment date local counterparty deposits local currency amounts in its local account, which are converted into USD at fixing and delivered to the Lender (as specified in the loan contract).

  10. Good contacts for companies doing business in Brazil INTSOK - Brazil supplier catalogue

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