IDB Executes Innovative Currency-Conversion Transaction with BNDES

The Inter-American Development Bank (IDB) has executed an innovative foreign-exchange transaction with Brazil's Banco Nacional de Desenvolvimento Econômico e Social (BNDES) to convert a $437.5 million U.S.-dollar-denominated loan to Brazilian reales (BRL) at a highly attractive rate. The transaction was celebrated on June 19, during a meeting between the IDB President Ilan Goldfajn and BNDES President Aloizio Mercadante at the BNDES headquarters in Rio de Janeiro.

The IDB closed the operation 50 basis points below a conventional currency conversion, providing BNDES with a cost-effective alternative and reducing its currency exposure.

“This operation exemplifies our commitment to Brazil and to a strategic partner in promoting the country’s development, BNDES. Through this innovative financial mechanism, we not only enhance the effectiveness of our support but also the positive impact our joint operations have on society,” stated IDB President Ilan Goldfajn.

The president of BNDES, Aloizio Mercadante, emphasized the importance of the operation, especially in long-term infrastructure projects. “Mitigating exchange rate risk is crucial for financing Brazilian development. This new conversion mechanism, therefore, represents a powerful tool for managing foreign exchange liabilities for BNDES. We are very pleased with the result achieved.”

This transaction, the first of its kind executed by a multilateral development bank for a sovereign-owned borrower, demonstrates the IDB’s commitment to financial innovation that serves the debt management needs of their borrowing member countries. It also underscores the organization’s role as a catalyst for economic growth and resilience in the region.

During the meeting, the presidents of the IDB and BNDES also discussed other areas of collaboration, including sustainable financing, support for the Amazon and digitalization.