Resolution CMN No. 2515 — Establishes Criteria for Accreditation and Authorization of External Credit Operations of Interest to States, the Federal District, Municipalities, and Their Entities Without Federal Guarantee

RESOLUTION NO. 002515

Establishes criteria for the accreditation and authorization of external credit operations of interest to the States, the Federal District, the Municipalities, their autarchies, foundations and companies, including their affiliated, controlled, affiliated and subsidiary companies, and of the autarchies, foundations and non-financial companies of the Union, including their affiliated, controlled, affiliated and subsidiary companies, without guarantee of the Union, as well as for the raising of external resources by state banks.

The CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595 of December 31, 1964, makes public that the MONETARY COUNCIL, in a session held on June 29, 1998, based on Articles 4, items V, VI and XXXI, and 57 of the aforementioned Law, and taking into account the provisions of Article 98 of Decree No. 93,872 of December 23, 1986,

RESOLVES:

Article 1. Establish the following criteria to be observed in the accreditation with the Central Bank of Brazil of external credit operations of interest to the States, the Federal District, the Municipalities, their autarchies, foundations and non-financial companies, including their affiliated, controlled, affiliated and subsidiary companies, and of the autarchies, foundations and non-financial companies of the Union, including their affiliated, controlled, affiliated and subsidiary companies, without guarantee of the Union:

a) the resources must be directed towards the refinancing of their own financial obligations already contracted, with preference for those with higher cost and shorter term, and, while not used in the settlement of such commitments, they must remain in a linked account as established by the Central Bank of Brazil;

b) the total amount of the obligations contracted for the purpose referred to in the previous item must be subject to provisioning, through monthly deposits in a linked account, as established by the Central Bank of Brazil, whose value must correspond to the total of the obligations, including principal and interest, divided by the number of months covered by the total payment term;

c) the external creditor ("underwriter", in the case of bond issuance) must be an institution that traditionally maintains financial relations with the Country or that holds a risk rating equal to or higher than "BBB" or equivalent, from the international risk rating agencies, among those with the greatest prominence;

d) the contracts relating to the operation must contain a clause that specifies that they are obligations without guarantee of the Union and that the creditors declare themselves aware that they cannot count on the injection of Union resources for the redemption of such operations, if the debtor does not have the conditions to do so, upon maturity.

Sole Paragraph 1. The provisions of this article do not apply to loans and financing granted by multilateral organizations of which the Country is a participant or by official organizations.

Sole Paragraph 2. The provisions of items "a", "b" and "c" of this article do not apply to operations related to financing for the import of goods and services.

Article 2. Establish that the contracting of external loan operations by banks controlled by States and the Federal District, for the purposes provided for in the current legislation, must also comply with the criterion mentioned in item "c" of the previous article.

Article 3. Establish that the state bank to be authorized to raise resources abroad must hold, in at least one international risk rating agency, among those with the greatest prominence, a risk rating equal to or higher than that obtained by the Union, in the same agency.

Article 4. The Central Bank of Brazil will issue the necessary rules for the execution of the provisions of this Resolution and will provide for cases that should not be classified under the restrictions provided for herein.

Article 5. This Resolution enters into force on the date of its publication.

Article 6. Resolution No. 2,383 of May 22, 1997 is hereby revoked.

Brasília, June 29, 1998

Gustavo H. B. Franco
President

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NOTE: Retransmitted correcting the caput of Article 1 and letter "a" of the same article.