Swiss Insured Brazil Power Finance S.à r.l


Swiss Insured Brazil Power Finance S.à r.l. (SIBPF) is a private limited liability company incorporated in Luxembourg.

The company was established in 2017 to issue senior secured notes due 2032 (the “Notes”) to finance the acquisition of a hydroelectric power plant in Brazil. The Notes are guaranteed by a Swiss subsidiary of a major Brazilian power company.

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Company Overview

SIBPF is a special purpose vehicle (SPV) that was created for the sole purpose of issuing the Notes. The company does not own or operate any assets other than the Notes. SIBPF is managed by a board of directors that comprises representatives from the Noteholders, the guarantor, and the underwriters.

Notes Overview

The Notes are senior secured obligations of SIBPF. They are rated AA- by Fitch Ratings and Baa2 by Moody’s Investors Service. The Notes are due 2032 and bear interest at an annual rate of 9.85%. The Notes are secured by a first-priority lien on all of the assets of SIBPF, including the Notes themselves.

Use of Proceeds

The proceeds from the issuance of the Notes were used to finance the acquisition of a hydroelectric power plant in Brazil. The power plant is located in the state of Minas Gerais and has a capacity of 140 megawatts (MW). The power plant is expected to generate approximately 600 gigawatt-hours (GWh) of electricity per year.

Investment Highlights

The Notes offer investors several attractive investment highlights, including:

  • Strong Credit Quality: The Notes are guaranteed by a Swiss subsidiary of a major Brazilian power company.
  • Attractive Yield: The Notes bear interest at an annual rate of 9.85%.
  • Diversification: The Notes provide investors with exposure to the Brazilian power sector.
  • Liquidity: The Notes are expected to be listed on a major European exchange.

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Delving into the Strategic Dynamics of Swiss-insured Brazil Power Finance

In the dynamic realm of global finance, Swiss Insured Brazil Power Finance S.à r.l. (SIBPF) emerges as a prime example of innovative financial structuring and strategic execution. Through its focused approach, SIBPF has carved a niche in the Brazilian power sector, offering investors a compelling blend of risk-adjusted returns and diversification benefits.

Strategic Rationale: A Special Purpose Vehicle (SPV)

The establishment of SIBPF as a special purpose vehicle (SPV) marks a pivotal strategic decision. By creating a dedicated entity solely focused on the issuance of senior secured notes due 2032 (the “Notes”), SIBPF eliminates any distractions or conflicts of interest, allowing for a laser-sharp focus on its core objective. This focused structure fosters operational efficiency and ensures that all resources are dedicated to fulfilling the Notes’ financial obligations.

Operational Efficiency: A Streamlined Approach

SIBPF’s operational scope is intentionally limited, encompassing solely the issuance and management of the Notes. The company refrains from engaging in asset ownership or operational activities related to the hydroelectric power plant it financed. This strategic decision enhances operational efficiency and allows SIBPF to operate with minimal overhead costs, maximizing the potential returns for Noteholders.

Strengthening Credit Backing: A Robust Pillar of Protection

The Notes’ creditworthiness is significantly bolstered by their guarantee from a Swiss subsidiary of a major Brazilian power company. This credit enhancement provides a strong layer of protection for Noteholders, mitigating risks associated with the issuer’s financial health. The guarantor’s solid financial standing serves as a reassuring anchor for investors, fostering confidence in the Notes’ value preservation.

Attaining Attractive Yields: A Balancing Act

SIBPF seeks to strike a delicate balance between offering attractive yields to attract investors and maintaining a prudent credit profile. The Notes’ annual interest rate of 9.85% is an attractive proposition for investors seeking higher returns without compromising on credit quality. This balance demonstrates SIBPF’s ability to structure its financial obligations in a manner that aligns with investor expectations and risk appetites.

Diversifying Portfolios: A Gateway to Strategic Exposure

The Notes provide investors with a unique opportunity to diversify their portfolios by gaining exposure to the Brazilian power sector. This exposure can help mitigate risks associated with other asset classes, enhancing the overall diversification of investors’ portfolios. The Brazilian power sector’s inherent stability and growth potential further amplify the diversification benefits offered by the Notes.

Enhancing Liquidity: A Path to Market Accessibility

SIBPF’s plans to list the Notes on a major European exchange hold significant promise for enhancing their liquidity. Listing the Notes will expand their investor base and facilitate their trading, making them more accessible to a wider range of investors. This enhanced liquidity will also contribute to the Notes’ price stability and overall marketability.

Navigating Potential Risks: A Vigilant Approach

Despite its strengths, SIBPF’s operations are not without potential risks that investors must carefully consider:

  • Credit Risk: The Notes’ value is ultimately dependent on the financial strength of the guarantor. Any deterioration in the guarantor’s creditworthiness could adversely impact the Notes’ value.
  • Currency Risk: The Notes’ denomination in US dollars exposes investors to fluctuations in exchange rates. Investors domiciled outside the United States may experience additional currency risk when converting their local currency to US dollars.
  • Country Risk: The Brazilian power sector is influenced by the overall economic and political environment of Brazil. Any adverse developments in these areas could impact the profitability and value of the hydroelectric power plant, potentially affecting the Notes’ performance.

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The Notes offer investors several attractive investment highlights, including strong credit quality, attractive yield, diversification, and liquidity. However, investors should also be aware of the associated risks including credit risk, currency risk, and country risk.

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