Brazil Local Market Guide

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES AND
ANALYST CERTIFICATIONS.
CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION

Client-Driven Solutions, Insights, and Access

Guide to
Brazil Local Markets

Economics Brazil

This report, in its eighth year, provides international investors with a summary
of Brazils fixed-income market and describes in a nutshell the bonds and
derivatives available, the institutions and market players involved, and the
taxes levied on the different products. It also presents an overview of the
LOCuS system, which Credit Suisse clients can access to obtain financial
market data and real-time quotes.

13 March 2014
Economics Research
http://www.credit-suisse.com/researchandanalytics

Research Analysts
Nilson Teixeira
+55 11 3701 6288
nilson.teixeira@credit-suisse.com

Paulo Coutinho
+55 11 3701 6353
paulo.coutinho@credit-suisse.com

Iana Ferrao
+55 11 3701 6345
iana.ferrao@credit-suisse.com

Leonardo Fonseca
+55 11 3701 6348
leonardo.fonseca@credit-suisse.com

Daniel Lavarda
+55 11 3701 6352
daniel.lavarda@credit-suisse.com

We acknowledge the significant assistance from
Pmela Borges, Felipe Leon and Tlio Sousa
in the preparation of this report.

13 March 2014
Brazil Local Markets 2
Table of Contents
Summary 4
1. Introduction 5
2. Financial System 7
3. Exchange Rate 8
4. Interest Rates 12
4.1. Selic Rate ................................................................................. 12
4.2. CDI Rate .................................................................................. 13
4.3. Basic Financial Rate ................................................................. 14
4.4. Reference Rate ........................................................................ 14
4.5. Long-Term Interest Rate .......................................................... 15
5. Inflation Indexes 17
5.1. IBGE Indexes ........................................................................... 17
5.2. FGV Indexes ............................................................................ 18
6. Brazils Public-Sector Debt 20
6.1. Overview .................................................................................. 20
6.2. Domestic Public Securities ....................................................... 21
6.3. Secondary Market .................................................................... 27
7. Private-Sector Securities 29
7.1. CDBs and RDBs ....................................................................... 29
7.2. Corporate Bonds ...................................................................... 31
7.3. Agricultural Cash Forward Contract Bonds (CPRs) .................. 33
7.4. Certificates of Real Estate Receivables (CRIs) ......................... 34
7.5. Banking Credit Notes (CCBs) ................................................... 38
7.6. Receivables-Backed Investment Funds (FIDCs) ...................... 38
7.7. Judicial Requisitions to Treasury for Budget Appropriation
and Payment of Money Judgments (Precatrios) ............................ 40
7.8. Treasury Bills (LFs) .................................................................. 41
8. Derivatives and Swaps 43
8.1 Futures and Options .................................................................. 43
8.2. Swaps ...................................................................................... 55
9. Taxation of Foreign Investments in Brazil 59
9.1. Income Tax .............................................................................. 59
9.2. Tax on Financial Transactions (IOF) ......................................... 61
13 March 2014
Appendix A: Financial System Entities 62
Regulatory and Oversight Entities ................................................... 62
Other Important Entities .................................................................. 64
Appendix B: Requirements for Foreign Investors 67
Appendix C: Form for Foreign Investors Registration with the CVM 68
Appendix D: Brazil Local Markets in LOCuS 71
Introduction ..................................................................................... 71
Brazil in LOCuS ............................................................................... 72
List of Web Sites ............................................................................. 80

13 March 2014
Summary
This Guide to FI Markets in Brazil explains in detail the operations of Brazils fixed-income
financial market. It describes the main financial assets and instruments traded locally
(bonds and derivatives) as well as the applicable taxes. It also contains important
information on the main institutions that regulate and oversee the local financial system.
Among the assets and financial instruments presented, we highlight the following:
federal public securities, the main public debt bonds traded on the local market,
whether fixed-rate or linked to a floating interest rate or inflation index; information is also
provided on auctions of public debt securities;
private bonds, especially certificates and receipts issued by financial institutions
(Certificates of Deposit (CDBs), Non-Transferable Certificates of Deposit (RDBs), and
Treasury Bills (LFs)) and by companies in general (bonds);
assets backed by credit receivables, especially Banking Credit Notes (CCBs) and
specific receivables such as Certificates of Real Estate Receivables (CRIs); there is also
a description of Receivables-Backed Investment Funds (FIDCs), which raise capital for
the acquisition of receivables to be traded on the market in the form of fund shares;
precatrios, which are judicial requisitions to treasuries for budget appropriation and
payment of money judgments against public entities; these instruments are classified as
receivables, and the attached rights can be assigned to a third party by the respective
holders;
derivatives, the main financial derivatives traded on the securities, futures, and
commodities exchange and on over-the-counter markets; these derivatives include
swaps involving interest rates, exchange rates, and inflation indexes as well as option
contracts.
For each of these assets, we provide the yield calculations and data on volumes,
secondary-market liquidity, and timetables of issuances and maturities.
This guide is divided into nine sections and four appendices. The first section presents a
general overview of the participation of foreign investors in the Brazilian fixed-income
market. The second presents the main institutions that comprise the Brazilian financial
system and their roles, described in further detail in Appendix A. The following section
presents Brazils foreign exchange market and describes the main currency trading
platforms and the PTAX exchange rate calculated by the central bank and used as a
benchmark for settlement of onshore and offshore contracts indexed to the USD. In the
fourth section, we present the main interest rates used in the domestic markets, especially
the Selic basic interest rate, used to guide monetary policy, and the Certificate of Interbank
Deposit (CDI) rates. The fifth section contains an overview of the main inflation indexes
used in Brazil. A more extensive discussion of these indexes can be found in the Brazil
Inflation Guide, first published on June 25, 2009. The main features of public and private
fixed-income securities are presented in detail in sections six and seven, respectively.
Section eight presents the main derivatives and swaps of interest, currency, and inflation
rates traded on the local market. Taxation matters are addressed in section nine. In
Appendices B and C we present the main procedures a foreign investor needs to follow in
order to qualify to trade in the local market. Finally, Appendix D contains a guide to the
pages on Brazilian fixed-income markets within the LOCuS system, which can be
accessed by Credit Suisse clients.
13 March 2014
1. Introduction
The flow of foreign portfolio investments into the main emerging economies has grown
significantly in recent years (Exhibit 1). Historically, foreign investors financial investments
in Brazil have been heavily concentrated in equities. Nevertheless, the share of foreign
investments in fixed-income securities has increased since the mid-2000s (Exhibit 2). We
believe this movement will continue in the coming years, owing mostly to the continued
wide gap between domestic and international interest rates and the withdrawal in June
2013
1
of the 6% Tax on Financial Transactions (IOF) levied on these investments since
October 2010.
Exhibit 1: Net Foreign Portfolio Inflow into Debt
Instruments
Exhibit 2: Breakdown of Stock of Foreign Portfolio
Investments in Brazil
USD bn % of total, USD bn
2008
1
2
8
6
5
10
3
10
14
5
13
15
7
9
30
11 11
23
-4
0
16
20
32
25
8
11
37
47
71
50
2009 2010 2011 2012 2013
Chile
Indonesia
1
Brazil
Turkey
2
Mexico
1

450
400
350
300
250
200
150
100
50
0
100
90
80
70
60
50
40
30
20
10
0
Nov-02 Sep-04 Jul-06 May-08 Mar-10 Jan-12 Nov-13
Equities (%)
Fixed Income (%)
Portfolio Size
(USD bn, LHS)

1
Cum. 12 months through September.
2
Cum. 12 months through November.
Source: IMF, Credit Suisse
Source: Central Bank of Brazil, Credit Suisse
The share of domestic federal securities debt (DPMFi) held by foreigners in Brazil
continues to rise, although current levels are somewhat lower than in other emerging
markets (Exhibit 3). The higher share of foreign investors in government securities has a
positive impact on the domestic debt profile. Compared to local investors, foreigners are
usually more prone to invest in fixed-income securities with much longer maturities. Hence,
the increase in the participation of foreign investors has contributed to an extension in the
maturities of government debt.
In addition to their impact on the maturity profile, foreign investors help increase liquidity in
the secondary market, particularly for instruments still sparsely used in Brazil, notably
bonds backed by credit receivables.

1
For securities traded in Brazil. Securities traded abroad with maturities of less than one year are subject to the IOF at 6%.
13 March 2014
Exhibit 3: Share of Domestic Public Debt of EM Countries Held by Foreign Investors
% of total
Brazil Turkey
Mexico
0
2
4
6
8
10
12
14
16
18
Dec-13 Jan-08 Jan-10 Jan-12
16.1
Dec-13 Jan-07 Jan-09 Jan-11 Jan-12
8
10
12
14
16
18
20
22
24
26
21.5
5
10
15
20
25
30
35
40
Dec-13 Jan-07 Jan-09 Jan-11 Jan-12
36.9

Source: Treasuries, Credit Suisse
In the past few years, the Brazilian government has announced a set of measures to
encourage long-term financing. The measures were structured in two main parts: tax
incentives for long-term corporate bonds earmarked for investment projects and the
creation of a fund to stimulate the liquidity of those bonds in the secondary market
(although this fund has not yet become operational). Through those measures,
households and foreign investors purchasing local corporate bonds that meet certain
criteria became exempt from income taxes and the IOF tax
2
.

2
In October 2010, the government increased the IOF levied on foreign investments in fixed-income
securities traded in Brazil, including infrastructure bonds, to 6%. The government reduced to 0% first the
IOF on infrastructure bonds (in December 2011) and, later, the IOF on all private securities traded in the
country (in June 2013).
13 March 2014
2. Financial System
The basic features of Brazils financial system were established through a series of
institutional reforms that started in 1964/65 with the creation of the National Monetary
Council (CMN) and the Central Bank of Brazil and ended in 1976 with the creation of the
Brazilian Securities Commission (CVM).
Additional measures to restructure the financial system involved regulations to separate
proprietary trading from asset management (information barriers), the introduction of
compliance departments within financial institutions, the creation of a credit risk center,
new directives to control market risks and interest rate risk (already applicable to foreign-
currency transactions), and the reform of securities market legislationwhich increased
the participation of minority shareholders in company decisions and introduced corporate
governance practices.
Exhibit 4 illustrates the institutions operating in the Brazilian financial system and agencies
in charge of oversight and regulation. The role of the major regulatory and oversight
agencies is explained in detail in Appendix A.
Exhibit 4: Regulatory and Oversight Agencies
Other settlement and custody systems
Foreign exchange brokers

Central Bank Securities Commission (CVM) Operating Institutions
Financial Institutions Financial Institutions
Full-service banks
Commercial banks
Savings and loan associations
Credit unions
Development banks

Investment banks
Leasing companies
Settlement and Custody Systems
Selic
Cetip
Consortium managers
Asset Management
Credit, finance, and investment companies

Mutual funds
Investment clubs

Foreign investors' portfolios
InMaturityediaries

Commodities and futures exchange
Stock exchanges

Autonomous investment agents

Brokerage firms / securities dealers

Source: Brazilian Securities Commission (CVM), Credit Suisse
13 March 2014
3. Exchange Rate
The Brazilian exchange rate system is a dirty float system. The central bank actively buys
and sells dollars both in the spot and derivative markets. According to the monetary
authority, the interventions in the FX market aim to cover a lack of liquidity and ensure that
the market functions properly. To make the system more transparent, the central bank
intervenes in the market through primary dealers
3
, disclosing information to the market on
weekly basis, generally on Wednesdays
4
.
In 2005, the National Monetary Council (CMN, Appendix A) concluded the process of
unifying Brazils FX markets. Under the new regime, the differences in legislation and the
commercial
5
and tourism
6
rates were eliminated. Virtually all exchange rate transactions
must be registered with the central bank; however, unification of the FX markets significantly
simplified transactions involving foreign currencies and reduced red tape, especially for
offshore remittances.
Under the previous system, each type of transaction required a different set of documents.
With the unification of the markets, the documents necessary for FX transactions ceased to be
classified by type. Moreover, the financial institution carrying out the transaction is responsible
for submission of all necessary documentation, except in certain situations.
Spot Market
The spot FX market has a daily average turnover of around USD 3bn. Spot trades can be
made on the So Paulo Securities, Commodities, and Futures Exchange (BM&FBovespa,
Appendix A), on the over-the-counter (OTC) market, or at foreign exchange
clearinghouses. All trades must be registered in the Central Bank Information System
(SISBACEN, Appendix A).
The spot dollar market of the BM&FBovespa was created in February 2006. It is a trading
system that allows parties interested in buying and selling dollars to make bids through a
broker or a bank, which are responsible for sending accepted orders to traders at the
BM&FBovespa for execution. Although this market provides more transparency and safety
in trading, it has very low liquidity, in part due to the costs involved in settlement services.
Before the emergence of the BM&FBovespa spot dollar system, transactions in the spot
dollar market were carried out only in the interbank FX market, between brokerage firms
and banks authorized to operate by the central bank.

3
The central bank currently intervenes in the FX market via 14 previously selected financial institutions
(primary dealers). The dealers are chosen every six months, and at least two institutions must swap
functions in each period. The number of dealers may also change between periods. The central bank
uses the following five criteria for selecting dealers:
1. information provided to the central bank (weight of 30%), used by the central bank to determine how
each institution operates in the FX market;
2. imports and exports (25%), volume of FX transactions linked to imports and exports traded by the
institution;
3. financial FX (20%), the volume of financial FX transactions carried out by the institution;
4. USD-linked securities and reverse FX swaps (20%), volume of public debt bonds adjusted for
currency gains/losses and currency coupon swaps traded by the institution; and
5. interbank market (5%), volume traded by the institution in the FX interbank market.
4
The Treasury also buys dollars in the market to cover external debt obligations. The Treasurys purchase
operations are made using Banco do Brasil.
5
This segment was used for: (i) exports/imports; (ii) federal, state, and municipal governments; (iii) foreign
investments in Brazil and loans to residents; and (iv) payments for services.
6
The floating FX rate segment was for tourism transactions, contributions to associations, donations,
inheritances, retirement and pension benefits, maintenance of residents and health treatment.
13 March 2014
PTAX Rate
The PTAX is the official exchange rate used for settlement of financial contracts indexed to
the dollar. It is used as a benchmark for USD-linked onshore and offshore contracts (for
instance dollar future contracts and dollar-linked rates, such as non-deliverable forward
(NDF) contracts settled in USD, and bonds).
The central bank is responsible for calculating and publishing the PTAX rate. The PTAX is
the arithmetic average of the rates obtained in four daily consultations of exchange dealers.
Consultations are carried out at around 10:00 a.m., 11:00 a.m., 12:00 noon, and 1:00 p.m.
(local time). The exchange rate for each consultation corresponds to the average of rates
effectively quoted by the dealers, excluding in each case the two highest and two lowest
7
.
The results are released after each survey, and the PTAX rate is released around 1:00
p.m. (local time).
Government Intervention
As a response to the post-crisis BRL appreciation, the government implemented
measures aiming to reduce excessive volatility of the local currency. However, the
majority of these measures have been reverted since June 2012, following the
significant depreciation of the BRL in 2Q12 (from BRLUSD 1.80 in March to 2.05 in
June) and in 2013 (BRLUSD 2.45 in August). The main interventions in the FX market
during this period were (Exhibit 5):
Taxation of foreign investment in fixed income: The Tax on Financial Transactions
(IOF, described in more detail in Chapter 9) was charged on investments by non-
residents in fixed-income securities traded in Brazil. The rate, which increased from 0%
to 2% in October 2009 and from 2% to 6% in October 2010, applied to the purchase of
BRL by foreign investors. The regulation also required a simultaneous FX transaction if
the investor decided to migrate from an equity, futures, or commodities investment to a
fixed-income asset. In this case, the investor would have to pay the IOF tax as well. The
IOF was reduced to 0% in June 2013.
Taxation of foreign investment in equities: The IOF of 2% was imposed on non-
residents investments in equities, including American Depositary Receipts (ADRs), in
October 2009. In November 2009, the levy on investments in ADRs was reduced to
1.5%. The IOF rate on investments in equities traded in Brazil was reduced from 2% to
0% in December 2011 and on ADRs, from 1.5% to 0.0% in December 2013.
Establishment of mandatory reserves for banks short FX positions: In January 2011,
the reserve requirement was implemented on 60% of the short positions in dollars that
exceed the lower of USD 3.0 billion and the institution's Tier-1 capital. The reserves are
deposited at the central bank in local currency and are not remunerated. The upper limit
was lowered to USD 1.0 billion in July 2011. In June 2013, the government cancelled the
reserve requirements for banks short positions in dollars entirely.
Taxation of foreign loans: In March 2011 the Tax on Financial Transactions (IOF) was
charged on external loans with maturities of less than one year. The levy was extended
to loans with maturities of less than two years in April 2011, three years in March 2012,
and finally to five years later in March 2012. The IOF was maintained only for loans with
maturities of less than two years in June 2012. The threshold was later reduced to one
year in December of the same year.

7
This methodology went into effect in July 2011. The PTAX rate according to the former methodology was
the average (volume-weighted) FX rate of transactions in the spot FX market with settlement two days
after the transaction (T+2). This calculation was made after purging transactions whose volume exceeded
5% of the volume traded in the day. The rate was announced after the market close (5:30 p.m., local
time) and was based on only one daily survey.
13 March 2014
Taxation of short positions in financial derivatives: In July 2011, the IOF was
imposed at the rate of 1% on increases in short positions in financial derivatives whose
settlement value is influenced by movements in the FX rate (e.g., USD options, futures,
and forward-rate agreements (FRAs). The 1% IOF was also levied on domestic
investors to prevent increases in short dollar positions. Specifically, a new acquisition or
sale of an exchange derivative resulting in an increase in short position or decrease in
long position greater than USD 10 million in one day was subjected to the 1% IOF on the
notional value of the transaction. The government withdrew this measure in June 2013.
In sum, the governments intervention measures aimed at controlling FX rates, still in place
as of February 2014, are:
IOF levy of 6.0% on external loans with maturities of less than one year; and
IOF levy of 6.38% on credit card transactions abroad, on payments in foreign currency
made with debit cards, on foreign currency withdrawals abroad, on purchases of
travelers checks, and on the addition of foreign currency to prepaid cards.
13 March 2014
Exhibit 5: Interventions in FX Market
OCTOBER
19: Increase in Tax on Financial Transactions (IOF) rate on foreign inflows for equities and fixed-income
investments from 0% to 2%.
OCTOBER
04: Increase of IOF on investments in fixed income, from 2% to 4%. Investments in equities remain subject to the IOF of 2%.
07: Simultaneous FX transactions for foreigners that transfer their investments from the securities, futures, and commodities exchange to
other investments in the financial and capital markets, such as fixed-income securities.
18: New increase in IOF tax rate on inflows for the purchase of fixed-income securities, from 4% to 6%.
JANUARY
06: Imposition of reserve requirements on banks' short dollar positions.
Reserve requirement applies to 60% of short positions in dollars exceeding lesser of USD 3.0 billion and the institution's Tier-1
capital. Reserves are deposited with central bank in local currency and will not be remunerated.
10: Brazils Sovereign Fund permitted by its bylaws to deal in the FX market.
13: Resumption of central banks reverse swap auctions, taking long FX positions in derivatives markets.
25: Resumption of Maturity auction facilities by central bank in FX market.
MARCH
28: IOF rate on credit card transactions abroad raised from 2.38% to 6.38%.
29: IOF levy of 6% on foreign financing with maturity of less than one year.
APRIL
06: IOF levy of 6% on foreign loans is extended to transactions with maturity of up to 2 years.
JULY
08: Reduction in limit for reserve requirements on banks' short position in dollars.
Minimum deposit charged on 60% of short dollar positions that exceed lesser of USD 1.0 billion and bank's regulatory capital. Deposit
must be made in cash and will not be remunerated.
27: IOF levy of 1% imposed on increases in short positions in financial derivatives whose settlement value is affected by FX rate changes.
The levy will apply only to net short positions above USD 10.0 million.
27: Legal framework established for IOF levy on derivatives market. Government permitted to raise IOF rate to up to 25% of value of
transactions in derivatives market.
DECEMBER
01: IOF rate on investments in stocks and bonds of infrastructure companies reduced to 0%.
MARCH
01: IOF levy of 6% on foreign loans extended to transactions with maturities of up to 3 years.
02: Maximum period of advance payments by exporters limited to 360 days; transactions must be financed by importer of goods.
12: IOF levy of 6% on foreign financing extended to transactions maturing within 5 years.
JUNE
14: Maturity of loans subject to IOF levy reduced from 5 to 2 years.
28: Rules on advance payment transactions extended to financial institutions and other companies.
DECEMBER
04: Maximum period for advance payment of export transactions extended from 1 to 5 years.
05: Maturity of loans subject to IOF levy reduced from 2 years to 1 year.
JANUARY
30: IOF levy on foreign investment in shares of real estate investment funds reduced from 6% to 0%.
JUNE
04: IOF levy on foreign investments in fixed income reduced from 6% to 0%.
12: IOF levy on increases in short positions in financial derivatives whose settlement value is affected by FX rate changes reduced from
1% to 0%.
25: Cancellation of reserve requirements on banks short position in dollars.
JULY
03: Elimination of maximum Maturity (5 years) for prepayment of export transactions.
24: IOF levy on foreign investment in ADRs reduced from 1.5% to 0%.
DECEMBER
27: IOF levy on payments in foreign currency made with debit cards, on foreign currency withdrawals abroad, on purchases of travelers
checks, and on the addition of foreign currency to prepaid cards increased from 0.38% to 6.38%.
NOVEMBER
18: Reduction in IOF rate on foreign investment in ADRs from 2% to 1.5%.

Source: Central Bank of Brazil, Ministry of Finance, Credit Suisse.
13 March 2014
4. Interest Rates
Interest rates in Brazil (for example, the Selic basic interest rate and the Certificate of
Interbank Deposit (CDI) rate) are expressed mainly in compound annualized terms, based
on a year of 252 business days. They differ from the US standard compounding method,
which uses a 360-day year (Exhibit 6).
Exhibit 6: Counting of Days for Interest Rates in Brazil
Calendar Days 360 / Linear
i
e
effective rate in the period i
e
effective rate in the period
i
a
effective annual rate i
a
effective annual rate
d days between date 1 and date 2
(1)
Does not accrue on weekends or holidays
i
a
360
d
i
e
=
i
e
= (1+ i
a
)
business days
252
- 1
Business Days
(1)
/ 252 Exponential

Source: Credit Suisse
4.1. Selic Rate
The Special Settlement and Custody System (Selic) is an electronic system run by the
central bank for registration, settlement, and custody of transactions involving public
securities. All Selic transactions are settled immediately; debits and credits are made
directly to each institutions reserves account at the central bank.
The Selic rate is the average of rates for one-day financing transactions backed by
federal public bonds, carried out in the Selic system in the form of repurchase (repo)
operations8. The interest rates for the transactions used to calculate the Selic rate
reflect the liquidity conditions in the bank reserves market. These interest rates are not
influenced by counterparty risk in the buyback transactions since all trades are backed
by federal public securities.
The Selic rate is also the basic interest rate used as a benchmark for monetary policy. The
Selic rate is set by the Monetary Policy Committee (Copom) at its eight regular meetings
held each year. The Copom defines not only the target for the Selic rate but also the
Committees bias. If a negative or positive bias is adopted, the central bank governor can
alter the Selic rate target at any time between Copom meetings, provided this change
follows the direction of the announced bias. Using a bias has become unnecessary in
recent years, however, as inflation and volatility have both decreased significantly. The
bias has been neutral since March 2003.
The establishment of the target induces banks operating in the Selic system to carry out
one-day buyback transactions around the target, since the daily activity of the central bank
tends to offset surpluses or shortfalls in bank reserves, bringing the target close to the rate
effectively negotiated.

8
Sales of bonds with a buyback commitment assumed by the seller and a resale commitment assumed by
the buyer.
13 March 2014
4.2. CDI Rate
The CDI rate is the average rate of one-day transactions backed by fixed-rate Certificates
of Interbank Deposit (CDIs), registered and settled by the Cetip clearinghouse (Appendix
A). Its calculation takes into account only one-day trades between institutions of different
financial groups.
The majority of CDI trades are made for a period of one day (overnight) and are referred to
as DI Over. A repo based on the CDI rate takes place when two institutions agree on an
interest rate and close the deal electronically (Exhibit 7). The Cetip transfers ownership of
the CDI to the purchasing institution and creates a credit that impacts the selling
institutions reserve account at the central bank on the same day (T). On the next day
(T+1), the transaction is reversed, and the purchaser receives its reserve funds, plus the
previously agreed interest rate (DI Over rate). In October 2013 a new methodology was
adopted to calculate the DI Over rate. Under the new methodology all CDI transactions
recorded and cleared by the Cetip are used to obtain the DI rate weighted by volume.
According to the former methodology the 5% upper and lower tails were excluded from the
computation.
Exhibit 7: CDI Settlement
CDI
T+1 End of T+1
Interest $ +
B
u
y
e
r
S
e
l
l
e
r
$ CDI
$
T End of T
$ + Interest
CDI
CDI

Even though the central bank does not operate directly in this market, the CDI rate tends
to be very similar to the Selic rate (Exhibit 8).
Exhibit 8: Effective Selic Rate and DI Rate
Basis points, p.a.
0.065
0.085
0.105
0.125
0.145
0.165
0.185
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13
0.205
Effective Selic Rate
DI Rate

13 March 2014
4.3. Basic Financial Rate
The basic financial rate (TBF) was created to be used as a benchmark rate for
transactions within the financial system with maturities above 60 days. The TBF rate is the
average of rates paid on Certificates of Deposit (CDBs) and/or Non-Transferable
Certificates of Deposit (RDBs)
9
with maturities of 30 to 35 days. These transactions are
weighted by their respective volumes and involve only trades of the 30 largest institutions
on a given day, by volume of their issues of CDBs and RDBs. In the calculation of the
weighted average, the two highest and the two lowest rates surveyed and the securities
purchased by institutions from the same conglomerate are removed from the sample. The
TBF rate is used mainly as the basis for calculating the Reference Rate (TR).
4.4. Reference Rate
The Reference Rate of Interest (TR) was created in 1991 as a reference rate for future
inflation built into nominal market interest rates. The idea behind the TR is to strip out the
expected real interest rate from the nominal interest rate represented by the TBF. The
difference between these two rates points to the expected inflation for the period.
The TR rate is published daily by the central bank and is valid until the same day of the
following month. The calculation of the TR is based mainly on the TBF (average of CDB
and RDB rates), to which a reduction factor is applied. The TR reduction factor is a
function of the TBF, and the parameters of its formula are periodically updated by the
central bank (Exhibit 9).
Exhibit 9: Formulas for Calculation of TR
TR = - 1
R
1 + TBF
Where:
R = TR reduction factor
TBF = Basic Financial Rate on the
reference day
B = function of the TBF rate
TBF (% p.a.) B*
TBF > 16 0.48
15 < TBF 16 0.44
14 < TBF 15 0.40
13 < TBF 14 0.36
10.5 TBF < 13 0.32
10 TBF 10.5 0.31
9.5 TBF < 10 0.26
9 TBF < 9.5 0.23
R = 1.005 + B TBF
* The rule for deMaturityining the B factor is defined by
Central Bank Resolutions 3446 and 3356/07.

The TR rate is mainly used as the basic rate for the Brazilian savings and loan system,
which finances housing construction. Yields on savings deposits are split into two
components:
I. basic remuneration, at the Reference Rate (TR), and
II. additional remuneration, corresponding to:
0.5% p.m., when the Selic basic interest rate is higher than 8.5% p.a.;
70% of the annual Selic rate, when the Selic is less than or equal to 8.5% p.a.

9
Please refer to section 7.1.
13 March 2014
Until May 2012, the additional remuneration was 0.5% p.m., regardless of the Selic rate.
The change to the taxation rules governing returns on savings deposit accounts occurred
to prevent funds from migrating from government bonds and other securities indexed to
the Selic rate to savings deposits (the Monetary Policy Committee (Copom) set the Selic
rate below 8.50% in June 2012).
The continued reduction in the Selic basic interest rate in recent years has helped raise
the competitiveness of savings deposits versus other financial investments, mainly
because the investments are exempt from income tax, which varies between 15.0% and
22.5% for most types of investment (Exhibit 10).
Exhibit 10: Passbook Savings and DI Over Rates
% p.a.
CDI rate
Savings yield
5
10
15
20
25
30
Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13

4.5. Long-Term Interest Rate
The Long-Term Interest Rate (TJLP) was created in November 1994 to stimulate long-
term investments, which were previously less feasible due to the absence of a market for
long-term credit in the country. At present, the TJLP is the main rate for credit lines from
the Brazilian Development Bank
10
(BNDES) and from the Workers Support Fund (FAT).
The TJLP can theoretically be used in any transaction in the financial markets, but that
rarely occurs.
The Long-Term Interest Rate is effective for a calendar quarter and is calculated based on
the following parameters:
(i) the inflation target, prorated for 12 months as of the first month in which the rate is
effective, based on the annual targets set by the Brazilian Monetary Council
(CMN); and
(ii) the risk premium, which embeds an international real interest rate and a component
reflecting Brazils country risk in a medium- and long-term perspective.
The rate is set by the CMN and published by the last day of the quarter immediately
preceding the date on which it is to take effect (Exhibit 11).

10
As of December 2012, the total volume of BNDES loans was equivalent to 10.7% of GDP and the total
volume of all bank loans in the country was equivalent to 53.5% of GDP.
13 March 2014
Exhibit 11: Long-Term Interest Rate (TJLP) and Target for Selic Rate
% p.a.
TJLP
Selic
5
10
15
20
25
30
Dec-01 Dec-03 Dec-13 Dec-05 Dec-07 Dec-09 Dec-11

13 March 2014
5. Inflation Indexes
There are several price indexes in Brazil, mainly due to the countrys history of high
inflation. We discuss all of these indexes at length in our Inflation Guide: Inflation indexes
in Brazil, published on June 25, 2009.
The Broad Consumer Price Index (IPCA) is the index most closely followed by market
agents, due to its status as the standard price index of the inflation-targeting regime.
Another factor that heightened the importance of the IPCA versus other indexes was the
growth in government bonds linked to the IPCA (NTN-Bs), compared to growth in the
market for government bonds linked to other inflation indexes, such as IGP-M (NTN-Cs).
Despite the greater importance of the IPCA, market agents also follow the other price
indexes, in particular the General Price Indexes (IGPs) and the CPI put out by the Institute
of Economic Research Foundation (Fipe). These indexes differ in their underlying baskets
of goods and services, household target as a function of income brackets, and
geographical locations. In the case of the IGPs, producer inflation has higher weight in the
index than consumer inflation.
5.1. IBGE Indexes
The Brazilian Statistics Bureau (IBGE) publishes three important inflation indexes each
month: IPCA, IPCA-15, and INPC. The indexes follow the same method of calculation but
differ in terms of the data collection period and the composition of the basket of products
and services.
IPCA
The IPCA reflects prices on a nationwide basis (data collected in nine major metropolitan
areas, plus the cities of Goinia and Braslia), for goods and services used by households
with monthly income between 1 and 40 times the monthly minimum wage
11
. The change in
the index is calculated on the basis of the weighted arithmetic average of the price groups,
and the weighting is variable according to past inflation.
The most frequently analyzed breakdown of the IPCA is between market prices and
administered prices. Around 25% of the IPCA is composed of goods and services whose
prices are administered directly or indirectly by the government; the remainder is
represented by market prices. Recent inflation analyses have also made the distinction
between food and other items in the inflation index more relevant.
IPCA-15
The IPCA-15 index is calculated using the same methodology of the IPCA. The difference
is the period of the price surveys (sampling period). The IPCA-15 uses the prices collected
from the 16th day of the previous month to the 15th day of the current month, while the
IPCA is collected from the first through the last day of the month (Exhibit 12). Given that
the IPCA-15 is released before the IPCA, it has become a good method for determining
the trend of the IPCA.

11
From USD 339 to USD 13,560 as of February 2013.
13 March 2014
Exhibit 12: Period of Data Collection and Publication of IPCA-15 and IPCA
IPCA (Broad Consumer Price Index)
From the 1st to
the 30th day of
the reference
month
of the following month
IPCA-15 (Broad Consumer Price Index, mid-month)
From the 16th day of the
month before the reference
month to the 15th day of the
reference month
of the reference month
Survey
period
Approximate
monthly
release date
Index

Source: Brazilian Statistics Bureau (IBGE), Credit Suisse
5.2. FGV Indexes
The General Price Indexes (IGPs) are published by the Getlio Vargas Foundation (FGV).
They combine prices surveyed in various production chains, ranging from basic
agricultural prices to inputs in the construction sector. The IGPs are made up of three sub-
indexes: the Producer Price Index (PPI), the Consumer Price Index (CPI) and the National
Construction Cost Index (INCC, Exhibit 13).
Exhibit 13: Composition of General Price Indexes
% of total
INCC
Represents the value
added by the construction
industry to GDE
added by the retail sector
and consumer services
to gross domestic
expenditure (GDE)
CPI
60%
30%
10%
PPI
added by production,
transportation, and
wholesale trade to
GDE

Source: Getlio Vargas Foundation (FGV), Credit Suisse
The FGV releases three general price indexes during the month: IGP-10, IGP-M, and IGP-
DI, which use the same calculation methodology and differ only in their collection period
(Exhibit 14).
13 March 2014
Exhibit 14: Survey Periods and Publication of IGPs
IGP-10
From the 11th day of the
month to the 10th day of the
reference month
IGP-M
From the 21st day of the
month to the 20th day of
the reference month
Survey
period
Approximate
monthly
release date
Index IGP-DI
From the 1st to the 30
th
day of the reference
month
of the following month

The IGP-M is one of the most widely used indexes, mainly since it is published before the
end of the reference month, while the results of most indexes are not reported until the
following month. The IGP-M is the only IGP index that collects partial data every ten days,
called previews. The announcement of the partial results for the 10- and 20-day periods
enables analysts to anticipate changes in the overall IGP-M index. The IGP-M previews
measure the change in prices in 10- and 20-day periods over a fixed comparison base
(Exhibit 15).
Exhibit 15: Calculation of IGP-M and IGP-M Previews
21 20 20 21 30 10
Month 3 IGP-M = Average A / Average B
Average B Average A
1
st
IGP-M proxy in month 3 = Average C / Average B
2
nd
IGP-M proxy in month 3 = Average D / Average B
Month 1 Month 2 Month 3
30 1 1
Average C
Average D


13 March 2014
6. Brazils Public-Sector Debt
6.1. Overview
The improvement in solvency indicators and the active role of the Brazilian Treasury have
contributed to a significant change in the debt profile and to an increase in the average
time to maturity of domestic federal public securities debt (DPMFi), namely:
increase in the shares of fixed-rate securities and inflation-linked securities in total
debt;
reduction in the shares of Selic-floaters and USD-linked securities
12
(Exhibit 16).
Exhibit 16: Breakdown of Domestic Federal Debt Securities (DPMFi)
% of total
Fixed-rate
Inflation
Selic
FX
14.8
7.8
2.2
12.5
20.1
27.9
36.1
37.3
32.2
33.7
37.9 38.3
41.2
43.3
5.9
7.0
12.5
13.5
14.9
15.5
22.5
26.3
29.3
28.6
28.1
29.6
35.5
36.1
57.0
56.6
62.9
63.2
59.9
53.9
40.0
35.5
37.4 37.0
33.4
31.5
22.8
20.0 22.3
28.6
22.4
10.8
5.2 2.7 1.3 0.9 1.1 0.7 0.6 0.6 0.6 0.6
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: Brazilian Treasury, Credit Suisse
In theory, the new profile would make the public debt less risky by reducing the share that
is directly exposed to exchange rate fluctuations and monetary policy cycles. In addition to
the change in debt profile, the average time to maturity also rose (Exhibit 17)
13
.
Accordingly, the country has also experienced a reduction in the portion of debt maturing
in the next 12 months and an increase mainly in the stock of debt maturing within three
years (Exhibit 18). From 2011 to 2013, however, the stock of debt maturing within one
year increased slightly, while the stock of debt maturing in one to three years declined.
This movement is explained by the Treasurys more aggressive policy of swapping Selic-
linked securities for fixed-rate securities, which typically have shorter maturities.

12
The exposure of the DPMFi to the dollar is different from the debt profile due to dollar swap contracts,
whereby the central bank receives an amount equivalent to the FX gain/loss (plus a fixed interest rate)
and pays the CDI interest rate.
13
The Treasury calculates the average maturity of securities as the weighted average of the tenors of the
various flows (intermediate coupons and principal), with the weightings corresponding to the present
value of each payment. The average life is calculated as the average of the remaining tenor of the
securities, weighted only by the present value of the principal. In other words, the calculation of the
average life is less conservative than the calculation of the average maturity.
13 March 2014
Exhibit 17: Average Time to Maturity and Duration
of DPMFi Exhibit 18: Profile of DPMFi Maturities
Months BRL trillion and % of total
0
15
30
45
60
Oct-97 Oct-01 Oct-05 Oct-09 Oct-13
Average time to maturity
Average duration

Up to
1 year
1 to 3
years
More
than 3
years
0.5 0.6 0.8 1.1 1.3 1.6 1.9 0.4 0.6 0.7 1.0 1.2 1.4 1.8 2.0
44
32
24
41
29
30
46
37
17
36
41
24
27
36
37
25
40
35
25
36
39
55
26
19
1999
28
36
37
2001
35
44
20
2003
42
41
17
2005
30
41
29
2007
25
37
39
2009
22
41
37
2011
26
33
42
2013

Source: Central Bank of Brazil, Brazilian Treasury, Credit Suisse Source: Brazilian Treasury, Credit Suisse
Brazils external securities debt as a percentage of total securities debt has dropped
significantly since 2006, in part owing to the external debt bond buy-back program
(initiated in January 2006, Exhibit 19). The Brazilian Treasury no longer uses external debt
bond issuances as a source of funding, but rather for operational purposes. According to
the Treasury, the main aim of the new external debt issuances is to build a sovereign yield
curve in the international market in both USD and BRL, to serve as a benchmark for
private-sector issuances.
Exhibit 19: Breakdown of Public Securities Debt
% of GDP
6.1
4.1 4.4 3.1 2.4 2.0 2.1 2.0
46.1
46.0
41.7
43.2
42.5 43.0 43.6
42.2
2006 2007 2008 2009 2010 2011 2012 2013
DPFMi
DPFe
52.2
50.1
46.1 46.3
44.9 45.0
45.7
44.2

6.2. Domestic Public Securities
Since 2002, the Brazilian Treasury has been the only entity responsible for issuances of
public debt, both domestic and external. In the past, the central bank was responsible for
the issuance of external debt and shared the responsibility for domestic debt issuances
with the Treasury. Since then, the central bank has been responsible only for repo
operations, by managing a stock of securities originally issued by the Treasury. Currently,
the Treasury issues fixed-rate bonds with maturities of up to 20 years and inflation-linked
securities for up to 40 years (Exhibit 20). In the external market, the Treasury has already
issued fixed-rate securities in BRL maturing within 35 years (maturity in 2045).
13 March 2014
Exhibit 20: Features of Domestic Public Debt Securities
LFT NTN-B LTN NTN-C** Security NTN-F
no coupon per semester no coupon per semester Coupon per semester
- 6 - 6 Interest (%, p.a.) 10
26.6 95 18.6 84 Average time to maturity* (months) 40.6
440.5 605.8 547.7 66.0 Outstanding* (BRL bn) 200
5.1 4.2 15.6 - Daily average volume** (BRL mn) 2.5
Selic IPCA Fixed-rate IGP-M Index Fixed-rate
Still issued?

*As of August 2013. ** NTN-C 010131: interest of 12% p.a.. **In 2013, YTD through August
Source: Central Bank of Brazil, Brazilian Treasury, Credit Suisse
Almost all of Treasurys primary issuances are made via public auctions. At the end of
each month, the Treasury publishes a timetable with the dates of the auctions for the
following month as well as the total maturities and the maximum volume of securities that
will be offered. Banks, brokerage firms, and other institutions registered in the Selic
system can take part in the auctions, which are executed in the Central Bank Information
System (SISBACEN, Appendix A). Settlement is on the day after the effective date of the
operation (T+1).
The terms of the auctions depend on the type of securities offered. IPCA-Linked National
Treasury Bills (NTN-Bs) and Selic Floater Treasury Bills (LFTs) are sold through a
uniform-price auction, with a single sale price (or cutoff price). The other securities are
sold in multiple-price auctions
14
(also known as discriminatory auctions), with payment
based on the offered bid. Settlement takes place on the following business day and can be
made in cash or in other securities, according to the features of the securities being traded.
The Treasury follows a relatively stable timetable of primary issuances, with regular
auctions on Tuesdays, Wednesdays, and Thursdays, depending on the type of security
offered
15
(Exhibit 21). These regular auctions always take place from 12:00 noon to 1:00
p.m. (local time).
Exhibit 21: Features of Auctions of Public Securities*
as of December 2013
Settlement Cash Securities
Security
Frequency
Auction type
Weekday
Tuesday
(1
st
step, sale)
Wednesday
(2
nd
step, exchange)
Cash
NTN-F
2 weeks
Discriminatory
(multiple-price)
Thursday
NTN-B
2 weeks
Uniform
(single-price)
2 steps?
Cash
LTN
1 week
Discriminatory
(multiple-price)
Thursday
Cash/Securities
LFT
4 weeks
Uniform
Thursday
* As of December 2013

14
In the discriminatory auction, each buyer offers his bid, which may or may not be accepted by the
Treasury. Thus, in this case, the sale prices may be different among the various buyers.
15
In accordance with the 2013 Annual Financing Plan (PAF 2013), the Treasury will concentrate issuances
mainly in fixed-rate securities (LTNs and NTN-Fs) and IPCA inflation-linked securities (NTN-Bs).
13 March 2014
In addition to the auctions described above, the Treasury also holds other kinds of auctions
aiming to spread out maturities, lengthen tenors, change compositions, and stimulate
secondary market liquidity. In exchange auctions, for example, the Treasury receives only
other public securities as payment for the issuance, and in buyback auctions the Treasury
repurchases previously issued securities. These auctions take place at a lower frequency
(Exhibit 22) than the regular ones and have lower liquidity, sometimes ending with no deal.
Exhibit 22: Frequency of Exchange and Buyback Auctions*
Security Exchange Early redemption
Quarterly -
Variable Monthly
Quarterly -
Monthly Monthly
LTN
NTN-F
LFT
NTN-B

* As of December 2013
On the following pages, we present a description of the main public securities issued and
traded in the local market.
LTN (Fixed-Rate, Zero-Coupon)
Issuer: Brazilian Treasury Adjustment of nominal value: Not adjusted
Index: Fixed-rate Redemption of principal: At maturity
Nominal value on reference date: BRL 1,000.00 Number of days in year: 252 business days
Interest rate: 0% (sold at discount) Time to maturity: Liquidity date (inclusive) until maturity date (exclusive)
Interest: No payment of interest Negotiation: Yield-to-maturity (YTM)
Yield from Unit Price YTM: Yield-to-maturity (252 business days)
NV: Nominal value (BRL 1,000.00)
UP: Unit price (market price for 1 security)
bd: Business days between settlement date (inclusive) and maturity date (exclusive).
Unit Price from Yield
-1
252
bd
UP
NV
YTM =
Pricing
UP =
( )
252
1+ YTM
bd
NV
Liquidity / Daily Average (BRL mn)
Up to 1 year
1 to 2 years
2 to 3 years
0.1
1.1
6.6
4.8
2.9
2.3
1.7
1.4
1.2 1.0
1.6
3.0
0.1
1.3
1.3
1.1
0.8 1.6
1.1
0.8
1.0
1.8
0.1
0.3
0.4
0.1
1.1
0.6
0.6
1.2
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Average Time to Maturity (Months) Monthly Average of Issuances (BRL bn)
2007 2008 2009 2010 2011 2012 2013
11.6
6.3
11.3
14.8
18.2 17.8
16.2
5
10
15
20
Dec-07 Dec-09 Dec-11 Dec-13
7.0
19.6
15.2


13 March 2014
LFT (Selic-Floater Bond)
Issuer: Brazilian Treasury Adjustment of nominal value: Adjusted by the Selic factor
Index: Linked to Selic basic interest rate Redemption of principal: At maturity
Nominal value on Reference date: BRL 1,000.00 Number of days in year: 252 business days
Interest rate: 0% (sold at discount) Time to maturity: Liquidity date (inclusive) until maturity date (exclusive)
Interest: No payment of interest Negotiation: Yield-to-maturity (YTM)
YTM: Yield-to-maturity (annualized for 252 business days)
SELI C: Cumulative daily Selic rate factor from
Reference date (inclusive) to settlement date (exclusive)
UNV: Adjusted nominal value (by the Selic rate factor) NV: Nominal value on reference date (BRL 1,000.00)
UP: Unit price (market price for 1 bond)
bd: Business days between settlement date (inclusive) and maturity date (exclusive).
Quote: Price as a percentage of Adjusted Nominal Value
Pricing
UP
UNV
( )
252
1
bd
YTM +
=
1
- =
252
bd
YTM
UP
UNV
UNV
UP
Quote =
SELIC NV UNV =
SELIC is the BZSELCA
Index on Bloomberg
Liquidity / Daily Average (BRL mn) Issuances, Monthly Average (BRL bn)
6.8
7.1
6.8
7.4
4.4
1.0
7.2
2007 2008 2009 2010 2011 2012 2013 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Nov-13
Up to 1 year 1 to 2 years more than 2 years
840
443 450
370 158 195 174 217 155 186
1243
1034
388 348
551
666
294 402
130
171
264
380
529 518
367
1403
Maturity/Outstanding Volume (BRL bn) Average Time to Maturity (Months)
*As of December 2013
112.2 113.0
11.8
34.3
84.0
2014 2015 2016 2017 2018 20
25
30
35
21.8
34.2
28.9

13 March 2014
NTN-B (IPCA inflation-linked bond)
Interest rate: 6% p.a. Time to maturity: Liquidity date (inclusive) until maturity date (exclusive)
Interest: 29.56301410 per semester Negotiation: Yield-to-maturity (YTM)
77.6
82.6
86.4
50.6
60.9
2014 2015 2016 2017 2018
*As of December 2013
Maturity/Outstanding Volume (BRL bn) Average Time to Maturity (Months)
50
60
70
80
90
100
57.0
95.0
91.9
Liquidity / Daily Average (BRL mn) Issuances, Monthly Average (BRL bn)
4.7
2.4
2.0
4.8
6.2
5.6
3.9
2007 2008 2009 2010 2011 2012 2013
730 626 681
1121
1293
1557
3406
535
457
272
250
449
678
1873
4109
2006 2007 2008 2009 2010 2011 2012 2013
Up to 2 years 2 to 4 years More than 4 years
488
Coupon: Interest paid every semester
UNV: Adjusted nominal value (by the IPCA rate factor)
I PCA
2
: IPCA index number for the previous month
I PCA
1
: IPCA index number for the month prior to reference date
PR: Prorated adjustment of IPCA inflation forecast (% mom)
YTM: Yield-to-maturity (annualized for 252 business days)
NV: Nominal value on reference date (BRL 1,000.00)
UP: Unit price (market price for 1 bond)
bd: Business days between settlement date (inclusive) and maturity
date (exclusive).
Quote: Price as a percentage of Adjusted Nominal Value
Pricing
UNV
UP
Quote =
(1 + YTM)
252
bd
i
Coupon
UP + =
n
i=1
UNV
252
bd
n
(1 + YTM)
PR NV UNV =
IPCA
2
IPCA
1
) ( Coupon=
2
1
1 - UNV + 6% 1

13 March 2014
NTN-F (Fixed-Rate Bond)
Interest rate: 10% p.a. Time to maturity: Liquidity date (inclusive) until maturity date (exclusive)
Interest: 48.808848 per semester Negotiation: Yield-to-maturity (YTM)
Average Time to Maturity (months) Issuances, Monthly Average (BRL bn)
6.6
2.3
3.5
4.5
1.9
2.2
3.3
2007 2008 2009 2010 2011 2012 2013
22
28
34
40
46
22.8
42.8
39.4
Pricing
NV: Nominal value (BRL 1,000.00)
Coupon: Interest paid every semester UP: Unit price (market price for 1 bond)
YTM: Yield-to-maturity (annualized for 252 business days) bd: Business days between settlement date (inclusive) and maturity date (exclusive)
Unit Price from Yield Yield from Unit Price
NV Coupon = -1 ) (1+10%
2
1
+
( ) 252 1+YTM
bd
i
Coupon
UP=
n
i=1
NV
( ) 252 1+YTM
bd
n
Liquidity / Daily Average (BRL mn)
31
208 23
534
296
428
132
26
513
203
143
1778
123
12
408
175
150
42
1
2007 2008 2009 2010 2011 2012 2013
Up to 1 year 1 to 2 years 2 to 3 years

13 March 2014
6.3. Secondary Market
Despite the sizable stock of domestic debt, the liquidity of the secondary market is low.
From 2009 to 2013, there was an increase in total liquidity, reversing the downward trend
observed from 2004 to 2008 (Exhibit 23). The recent increase was due to the growth in
trading of fixed-rate securities (NTN-Fs and LTNs) and IPCA-linked bonds (NTN-Bs).
Exhibit 23: Daily Average Trading Volume in Secondary Market
Per bond and total, BRL billion
Others
LTN
LFT
NTN-F
1.0 1.2 0.9 1.0 1.9 2.0
3.5
7.7
0.6 1.0
1.7 1.6
1.1
2.0
2.5
1.1 1.2
0.6 0.6
0.8 0.8
0.7
3.2
1.2
6.7
6.2
4.4 3.7
2.5
3.1
3.4 3.0
3.9
7.2
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
4.1
8.2
7.6
6.3
5.9
4.7
5.7
7.7
7.5
9.3
20.2
NTN-C
NTN-B

The increase in volume was concentrated in securities with longer maturities. Part was
driven by Provisional Decree 281
16
, published in February 2006, which exempted non-
resident investors from paying income tax on the purchase of public securities. The
measure affected mainly securities with longer maturities, especially above two years
(Exhibit 24). The government made investments in fixed income securities by non-
residents subject to the Tax on Financial Transactions (IOF) in October 2009 and
increased the rate in 2010, but on a temporary basis; in early 2013, the tax rate on fixed-
income portfolio inflows was once again reduced to zero.
Exhibit 24: Average Daily Trading Volume and Share of Securities Maturing in
More Than Two Years in Secondary Market
Per linker, USD million
Other
Fixed-rate
Inflation-linked
Selic
% of total
0.7 0.5 0.5 0.4
1.4 1.0
1.1 0.8 0.5
1.1
1.8
3.2
6.4
1.0
2.2
2.1
2.0
4.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0.9
0.5
0.7
1.5
2.3
1.5
1.7
3.9
4.3
5.5
11.8
21.0
5.8
8.5
24.7
38.2
33.0
29.1
50.0
58.1
59.3
58.6

Source: Credit Suisse, Central Bank of Brazil

16
Converted into Law No. 11312 in June 2006.
13 March 2014
As an alternative to the daily average, another measure of liquidity in the secondary
market is turnover, defined as the ratio between the total value traded in the past 12
months and the current debt stock. According to this criteria, there was also a sharp
increase in the liquidity of NTN-Fs until 2010, which has reverted in recent years.
Meanwhile, the liquidity of LTNs dropped significantly as the relative importance of
these securities has been surpassed by the higher issuances of NTN-Fs (fixed-rate
securities with longer maturities) and other securities, such as NTN-Bs. The turnover
of NTN-Bs, in particular, has recovered since 2010, after a decrease between 2006
and 2008 (Exhibit 25).
Exhibit 25: Turnover of Public Debt Securities
(Excluding Central Bank Portfolio)
% of outstanding volume
155
35
79
18
318
79
33
90
3
269
125
39
166
4
238
147
42
116
7
178
299
205
212
14
284
NTN-B LFT NTN-F NTN-C LTN
2006 2008 2010 2012 2013

Source: Credit Suisse, Central Bank of Brazil
13 March 2014
7. Private-Sector Securities
The market of private fixed-income bonds has grown at a very strong pace in recent years,
benefiting not only from the countrys macroeconomic stability but also from changes in
the legislation that have enabled the development of new credit methods.
The private sector issues many types of securities in the domestic market, especially:
Certificates of Deposit (CDBs) and Non-Transferable Certificate of Deposit (RDBs), private
securities debt (debentures/corporate bonds), Banking Credit Notes (CCBs), Certificates
of Real Estate Receivables (CRIs), and Receivables-Backed Investment Funds (FIDC).
The most significant are CDBs/RDBs and corporate bonds (Exhibit 26), even though the
stock of the other securitiesespecially CCBs, CRIs (Exhibit 27), and FIDCshas been
growing substantially in recent years.
Exhibit 26: Stock of CDB/RDBs and Corporate Bonds Exhibit 27: Stock of CCBs and CRIs
BRL bn BRL bn
Corporate bonds
CDB+RDB
4
3
4
4
8
5
1
5
52
1
0
2
4
8
2
8
33
3
83
9
7
5
0
5
5
8
5
1
5
2
1
2
6
2
8
3
3
2
9
3
6
2
6
8
4
7
6
8
7
8
2
6
8
3
5
9
8
5
4
6
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CCB
CRI
4
5
.
4
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0
.
7
1
.
7
2
.
9
6
.
7
1
2
.
9
2
0
.
5
1
8
.
4
1
8
.
2

2
2
.
5
2
4
.
7
2
6
.
7
0
.
6
0
.
9
2
.
1
2
.
2
2
.
9
7
.
2
1
0
.
6
1
8
.
9
2
7
.
8
3
3
.
4

Source: Cetip, Brazilian Association of Financial Market Institutions (Andima), Credit Suisse Source: Cetip, Credit Suisse
7.1. CDBs and RDBs
Certificates of Deposit (CDBs) and Non-Transferable Certificates of Deposit (RDBs)
are private securities issued by financial institutions (commercial, development,
investment, and full-service banks) with the aim of raising funds in the market for
financing commercial credit operations, with negotiated rates and maturities. CDBs
represent the vast majority of these two securities in the market (99%), especially
since RDBs are not transferable, i.e., they cannot be traded in the secondary market,
whereas CDBs do not have this restriction. This is the main reason why there is a low
stock of RDBs vis--vis CDBs (Exhibits 28 and 29).
13 March 2014
Exhibit 28: Stock of CDBs Exhibit 29: Stock of RDBs
BRL bn BRL bn
152
126
281
326
360
682
767
782
683
598
546
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

2.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0.3
0.8
1.7
2.1
2.0
0.9
0.7 0.7
0.8
0.4

Source: Cetip, Credit Suisse Source: Cetip, Credit Suisse
CDBs, like RDBs, may be fixed-rate or linked to an index (95% of the total in December
2013), while fixed-rate securities represent only 5% of the total (Exhibit 30). The
composition of the stock of these securities has remained roughly constant in recent years.
The CDB rate is calculated based on a year of 252 business days, as are the CDI and
Selic rates.
Exhibit 30: Stock of CDBs and RDBs, by Index
BRL bn
Floating rate
Fixed-rate
8 143
262
308
340
654
739
763
665
584
521
9
21
21
22
30
29
19
19
15
26
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
119
684
770
782
684
599
547
362
329
283
127
152

Source: Cetip, Credit Suisse
Trading in CDBs is done mainly on the over-the-counter (OTC) market and registered with
the Cetip clearinghouse, with settlement on the same day (D+0) or on the next day (D+1).
The liquidity of the secondary market of CDBs is very low (Exhibit 31), and the average
volume of daily trades as a percentage of the total outstanding volume dropped from 52%
in 2004 to 8.2% in 2010, increased to 16.1% in 2012, and declined again to 7.9% in 2013.
13 March 2014
Exhibit 31: Daily Trading Volume of CDBs in Secondary Market
BRL mn and % of total outstanding volume
61
169
259
280
260
279
668
343
257
262
384
170
19.1
28.2
52.0
25.0
19.8 19.3
24.9
11.2
8.2
9.6
16.1
7.9
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Daily average (BRL mn)
Total value of trading
as % of stock

7.2. Corporate Bonds
Corporate debt bonds (locally referred to as debentures) are generally issued by large
companies whose aim is to raise longer-term funds to finance projects and/or adjustments
in their capital structure. These bonds can be issued only by companies formed as publicly
or privately held joint stock corporations. However, only publicly traded companies can
make issuances for general investors (public issuances), while unlisted companies can
only issue securities to a restricted group of investors (private issuances).
Corporate bonds may pay periodic coupons, at fixed or floating rates or even linked to FX
or inflation indexes (especially the IGP-M). In general, corporate bonds pay a risk premium
in the form of a fixed spread or a percentage over the CDI interest rate, which reflects
companies risk classification. Debenture contracts include special clauses that define
types of guarantee, possibilities of repricing debts
17
, convertibility into shares, early
redemption, etc. The bonds may be issued without a fixed period for the redemption of the
principal amount (perpetual bonds).
The stock of corporate debt bonds in the domestic market has augmented significantly
since 2005, but the composition of this expansion has changed greatly. In early 2009, the
Brazilian Securities Commission (CVM) implemented rules for a new type of public offering
of private securities such as non-convertible corporate bonds, commercial paper, and
CCBs. These offerings are referred to as restricted efforts distributions (per CVM Directive
476 (ICVM 476)), involve less paperwork, and can be made only to qualified investors.
Issuances under this regulation do not need to be registered with the CVM until the end of
the distribution process. Accordingly, the offering process has become much faster and
should explain the significant rise in these distributions share of total bond issuances
(Exhibit 32). There are also a few restrictions on this kind of offering. For instance, the
number of investors the issuer can approach for the bookbuilding process is limited to 50,
only 20 of those can participate in the offering, and the securities can only be traded 90
days after the initial purchase.

17
Repricing is a mechanism used by the issuing companies to periodically alter (in accordance with the
clauses negotiated in the issuance) the terms agreed upon with the holders, to adjust the bonds to market
conditions. If investors do not accept the new conditions proposed by the company, the company will
have to acquire the bonds in advance.
13 March 2014
Exhibit 32: Issuances of Corporate Bonds
BRL bn
15 15
5
10
42
69
48
40
12
16
3
50
11
15
36
59
72
80
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Restricted efforts distribution
Pubic offerings

Source: Brazilian Association of Financial Market Institutions (Andima), Credit Suisse
Regarding the classification of bonds, the bulk available in the market is formed of book-
entry bonds, linked to the DI interest rate and not convertible into shares of the issuing
company, with a guarantee subordinated to the other creditors of the company
(Exhibit 33).
Exhibit 33: Main Classifications and Features of Corporate Bonds
Form % of total
Convertibility
Guarantee
Book-entry
Custody and book-entry processes carried out by a financial
institution duly authorized to operate by CVM
99.6
Registered Registration and control of transfers made by issuing company 0.4
Non-convertible Not exchangeable for other assets 99.9
Convertible Exchangeable for shares of issuing company to settle the debt 0.0
Junior
No priority over other creditors of the company;
priority only for shareholders
54.8
Unsecured debt
No priority in disposal of company assets in the event of composition
with creditors
38.0
Collateral
Secured by assets of issuing company or third parties (pledge, lien,
or receivables)
5.9
Floating-rate
Priority of bondholders to dispose of assets of issuing company in the event
of bankruptcy; company may transfer assets without prior authorization of
creditors
1.3
91.4
5.6
0.7
1.1
0.2
1.0
DI IPCA IGP-M TR USD Other

Source: Brazilian Association of Financial Market Institutions (Andima), Credit Suisse

13 March 2014
Trading in the secondary market is carried out on the trading floor or on an OTC market, by
institutions authorized to operate by the central bank and by the CVM. The National
Debenture System (SND), an entity run by Cetip based on the policies and directives
established by the Brazilian Association of Financial Market Institutions (Andima, Appendix
A), concentrates practically the entire volume of these securities traded in the secondary
market. The BM&FBovespa stock exchange also has systems dedicated to the trading of
fixed-income bonds in general, including corporate bonds, namely BovespaFix (an electronic
system run by orders) and SomaFix (OTC market). Investors interested in buying corporate
bonds must do so via a financial institution authorized to operate in these markets.
In order to foster investments in infrastructure and in intensive economic production in
research, development, and innovation, at the end of 2010 the government created
various incentives for private investments in such areas. Such incentives, later
consolidated under Law No. 12431/2011 of June 2011, include a reduction in the rates of
the Income Tax (IR) applicable to earnings of individuals, legal entities, and foreign
investors originating from bonds issued by Specific-Purpose Entities (SPEs) formed to
implement such projects (Law No. 12431/2011) . Income tax payable by individuals and
foreign investors was reduced to 0%, while the corporate income tax was reduced to 15% .
In September 2012, the Brazilian Development Bank (BNDES) announced new measures
to incentivize the issuance of these bonds. The measures seek to lower the issuers cost
of funding for these bonds. For those who buy the bonds, the initiatives expand
guarantees and reduce investment risk. According to the new rules, the bond issuances
may, at the discretion of the BNDES, share guarantees with potential loans taken out by
the bank for the same project. Another change is the inclusion of a cross-default clause
regarding loan agreements and potential public issuances for the same infrastructure
project. In other words, if the company defaults on the bond payment it will be blocked
from taking out additional loans from the bank. According to the clause, the BNDES can
declare early maturity of a loan if there is any type of nonperformance in connection with
the bonds. Accordingly, the clause increases the security of the market participants owing
to the relative importance of the BNDES as a long-term financier of projects.
7.3. Agricultural Cash Forward Contract Bonds (CPRs)
CPRs are used to finance transactions in agribusiness. They can be issued by farmers or
cooperatives and are negotiable on the secondary market.
Regarding settlement, there are two types of CPR:
Physical CPR: Settlement occurs upon physical delivery of the product. The CPR
establishes the quantity, place, and date of product delivery. The terms of the contract
may be amended by mutual agreement between parties.
Financial CPR: Settlement occurs via transfer of funds from the issuer to the buyer on
the securitys maturity date. The settlement amount depends on the specifications
established in the contract. In general, CPRs consider the selling price of the agricultural
product on the settlement date. There are also Financial CPRs whose amount payable
is defined at the time of issuance (Fixed-Price Financial CPR) or pegged to future
commodity prices or a futures exchange, especially the BM&FBovespa.
The law allows CPRs to have various types of guarantees. The most common are
fiduciary alienation and pledge of crops, herds, and/or agricultural implements and
equipment. Some CPRs are secured by bank bonds or insurance policies. Due to the high
cost of bank guarantees, most CPRs are secured by bonds issued by farmers themselves.
To be traded on the secondary market, CPRs must be registered with a custodial
institution, especially the Cetip clearinghouse. CPRs are registered according to the
physical volume of the product they refer to, but they do not state the financial value of the
13 March 2014
transaction. The liquidity of CPRs in the secondary market is very low, with many days
lapse without any activity. Additionally, average maturities are short, as these securities
are settled in the next harvest.
7.4. Certificates of Real Estate Receivables (CRIs)
CRIs are traded without restrictions; they are issued by securitization companies and
backed by operations that involve rights to real estate (most commonly credits related to
the sale of new properties, see Exhibit 34). However, the broad definition of the real estate
rights that serve as collateral enables the CRIs to be used not only to implement new real
estate projects, but also to deploy companies capital and enable the disbursement of
funds for investment activities.
Exhibit 34: Flowchart of Issuance of CRIs
Collecting
bank
Contract
$
CRI
$
Property sold
Contract
$
Payment of
installments
$
$
Amortization and
Interest
1 2 3
4
Securitization
company
Investors Buyer
Real estate
developer

Although CRIs were implemented in 1997 (Law 9154), only recently have they started to
contribute more significantly to growth in home loans
18
andlike corporate bondssee a
boost in originations driven by ICVM 476 (Exhibit 35).
Exhibit 35: Volume of CRIs Issued
BRL bn
Restricted efforts distribution (ICVM 476)
Public offerings
0.2 0.1
0.3
0.4
1.5
4.8
2.3 2.3
3.7
3.2
1.7
0.9
5.5
9.5
6.9
8.1
3.1
7.7
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
2.1
1.1
13.2
10.1
9.8


18
CRIs can be issued exclusively by home loan securitization companies and are generally composed of
various Real Estate Credit Notes (CCIs), which represent credits issued by the lender.
13 March 2014
The increase in the volume of CRIs in the last decade has been fostered by the more
favorable macroeconomic scenario, declining real rates, the expansion of home loans and
certain legal and tax changes, especially:
Creation of pool of assets available as security for debts or obligations: Since
2004, each real estate project must have its own capital and separate accounting
from the operations of the developer. If the real estate developer goes bankrupt, the
owners of the properties can retain a different company to conclude the project.
Thus, a CRI investor is not exposed to the risk of potential liabilities of the real
estate developer, but only to the risk of the operation that generated the home loan.
Hence, the main concern of the investor is the financial capacity of the original
borrower, whose flow of payments will be applied toward settlement of the security.
Fiduciary alienation (alienao fiduciria): This institution governs the transfer of
ownership to the borrower (buyer of the property). The buyer is the contingent owner,
meaning that full ownership is obtained only when the loan is fully paid off. If payment of
the loan is interrupted, the lender can recover full ownership and possession of the
property without filing suit. Fiduciary alienation for home loans does away with the need
to collect overdue debts in court, enabling extrajudicial enforcement of the guarantee.
Income tax exemption: Since January 2005, individuals are exempt from income tax
on net gains earned on CRIs as well as Real Estate Bills (LHs), and Real Estate
Credit Notes (CCIMs). Corporate and institutional investors are not exempt from
income tax.
In December 2010, the Ministry of Finance announced a package of measures to
stimulate private long-term credit. It exempts foreign investors from income tax on
earnings on CRIs that fulfill certain requirements (e.g., average term greater than four
years, impossibility of early redemption, and link to a government -approved
infrastructure investment project). The government also allowed CRIs to be booked
according to the rules for the allocation of savings deposits.
The new legislation led to a significant reduction in costs and, especially, in the
average time for recovery of properties in connection with non-performing loans. There
are no official statistics on the average recovery time for properties, but some issuers
suggest it is nearly six months (Exhibit 36).
13 March 2014
Exhibit 36: Timetable for Recovery of Real Estate
T+15
Second telephone call to verify whether the problem persists and the borrower intends to make
payment. Verification of receipt of the collection letter and possibility of renegotiation. Payment
deadline is T+30.
T+30
Third phone call to make the borrower aware that if payment is not made within ten days, an
official collection notice will be sent. Status reported to securitization company.
T+40
First collection notice, sent by registered letter, notifying the borrower of the debt amount.
T+60
Second collection notice, sent by registered letter, notifying the borrower of the debt amount and
demanding payment within 20 days.
T+80
Letter sent to the appropriate Real Estate Registry Office to officially report the arrearage and
other costs. A 15-day period is granted for the borrower to settle the arrears at the Real Estate
Registry Office.
T+83
If Real Estate Registry Office is unable to locate the borrower, a formal collection notice is
published in the newspaper.
T+98
After payment of the Municipal Tax on Property Transfers (ITBI), ownership of the property is
vested in the securitization company by Real Estate Registry Office.
T+110
Public auctioneer retained; publication of Invitation to Bid at first auction.
T+128
First public auction held (for at least the real propertys appraisal value).
T+130
Invitation to Bid at a second auction is published, if necessary.
T+133
If property is sold, the difference between the amount of the winning bid and that of the debt plus
charges and expenses is returned to borrower.
T+143
Second public auction is held (awarded to highest bidder, as long as the bid covers the debt plus
expenses and charges).
T+148
If the property is sold, the difference between the amount obtained at the auction and the debt
plus all expenses and charges is reimbursed to the borrower.
If the property is not sold at the second auction, a debt settlement instrument is issued by the
securitization company considering the debt paid and releasing the borrower from further liability.
T+5
Telephone call to inquire about the delay and schedule a new payment date, no later than T+10.
T+10
First collection letter sent out.

Source: Fitch Ratings, Credit Suisse

13 March 2014
Box 1: Certificate of Additional Construction Potential
The Certificate of Additional Construction Potential (Cepac) is a security subject to CVM
regulation, whose contract affords buyers the right to:
build in urban areas above the standard limits on land occupation (e.g., total occupied
area or maximum height of buildings); or
change the real estate property use in relation to that established in land occupation
laws.
Cepacs are used by municipal governments as an additional source of funding for urban
infrastructure works in certain areas. The municipal government defines, for a specific
region of the city, a list of projects for urban improvement (e.g., construction of overpasses
and squares) that ultimately tend to increase the value of the properties in those regions.
During execution of the listed projects, the municipal government auctions the Cepacs to
fund part of the construction. Then, Cepac buyers become entitled to perform construction
beyond the legal limits.
Cepacs do not create any liability for the issuing municipalities and issuances may be
public or private. The acquired rights are specific to each operation and cannot be
transferred to constructions on plots of land belonging to other regions of the city. These
securities may be traded on the secondary market and ownership does not require the
buyer to own plots of land or buildings in the regions to which the securities are related.
Cepac prices vary according to expected changes in property prices in regions where
public projects will be executed. In addition to the risk of prices in areas benefited by public
works not appreciating, one of the main risks associated with Cepacs is the risk of
significant changes in the master plan, for instance if the municipal government increases
the maximum permitted height of buildings, which reduces the value of the additional
construction rights.
As of September 2007, two urban operations had been registered with the Brazilian
Securities and Exchange Commission (CVM), both by the City of So Paulo: gua
Espraiada and Faria Lima. The first Cepac was issued in July 2004 via an auction held on
the over-the-counter market (Soma) of the So Paulo Stock Exchange (Bovespa), totaling
BRL 30mn allocated to the construction of a bridge within the gua Espraiada operation.
Since then, more than BRL 609mn has been issued to finance this project, out of total
potential funding of BRL 1.1bn until 2019 (54% of total). The Faria Lima operation raised
BRL 701mn of total potential funding of BRL 715mn (98%).
By the end of 2010, another Cepac had been registered with the CVM, with the objective
of improving urban development in the neighborhoods around the Rio de Janeiro harbor,
aiming to attract more residents and commerce to the area. The reurbanization project
includes the construction of tunnels and avenues, improvement of urban transportation,
and power, sewage, and telephone networks; a total of BRL 2.6bn in potential funding was
issued through Cepacs.
13 March 2014
7.5. Banking Credit Notes (CCBs)
CCBS are used to generate negotiable receivables. These notes are issued by an
individual or legal entity to a financial institution and represent an exigible debt, payable in
cash, in connection with any type of credit operation.
One of the main advantages of a CCB is that it is a legal document valid for initiating
enforcement proceedings, i.e., a CCB does not require fact-finding19 for enforcement,
which speeds up the legal proceedings and reduces the costs of collecting debts in court.
The amount due is determined unilaterally by the creditor, based on the terms of the bond.
Thus, the CCBs substitute other types of receivables (e.g., promissory notes), with
significant advantages for the creditors. With the CCB, a creditor financial institution may
collect the debt, moving directly to the phase of guarantee enforcement, reducing recovery
time and facilitating the sale of the loan to a third party
20
. The return on CCBs is generally
a percentage of the DI rate, in accordance with the maturity of the bond. CCBs traded in
the secondary market are originated mainly by small and medium-size banks.
7.6. Receivables-Backed Investment Funds (FIDCs)
FIDCs invest at least 50% of their net asset value (NAV) in credit receivables stemming
from operations carried out in the financial, commercial, industrial, real estate, mortgage,
leasing, and service industries. In general, an FIDC acquires receivables originated
through various credit operations and sells them to investors in the form of shares in the
fund (Exhibit 37).
Exhibit 37: Flowchart of an FIDC Generated in a Commercial or Industrial Operation
Collecting
bank
$
Payment of
installments
$
$
Amortization and
Interest
4
Receivables
$
Units (shares)
$
Products
Contract
Services
1 2 3
FDIC Investors Buyer Assignor

FIDCs are regulated by the CVM and do not have their own corporate identity. Thus, the
funds cannot issue debt and the entire NAV belongs to the shareholders.
FIDCs can be open or closed, like other funds:
Open: Shareholders can redeem shares at any time, subject to the minimum holding
period established in the funds bylaws; and
Closed: Shares can be redeemed only after the funds expiration or liquidation. The
shares can also be amortized during the life of the fund in accordance with the fund
bylaws or by a decision of the shareholders at a meeting.

19
Since fact-finding is not required, the creditor can collect the overdue debt in significantly less time.
20
Issuing a CCB makes it more difficult for the borrower to legally challenge the terms of the initial credit
transaction.
13 March 2014
In terms of classes, shares of FIDCs can be classified as:
Senior: Holders of this class of shares enjoy priority in amortization or redemption of
investments; and
Junior: Junior shares are subordinate to senior shares for amortization and redemption
purposes. Holders of junior shares receive the redemption or amortization of their shares
after the payment to all senior shareholders.
In other words, the funds entire return must be used, initially, to ensure payment to the
funds senior shareholders. The price of a senior share is calculated as the lesser of the:
Total net NAV of the fund divided by the total number of senior shares; and
The price of the share on the previous day adjusted for the stipulated benchmark
21
.
The price of junior shares is calculated as net equity minus the portion relative to the total
amount of the senior shares and divided by the total number of junior shares. In other
words, the junior shareholders are only remunerated when the leftover net NAV, after
meeting the obligations to senior shareholders, is positive.
V
sub = Value of junior shares
N
sen = Number of senior shares
V
sen = Value of senior shares
N
sub
NetEquity
-
N
sen
V
sen
=
V
sub

If the return of the fund is below the established target (generally defined as a proportion
of the DI rate or return above an inflation index), the senior shareholders will have a higher
return ensured by the use of the funds injected by the junior shareholders. Accordingly,
senior shareholders are less exposed to risk, and thus have a lower expected return than
junior shareholders.
The first FIDC was created in September 2002 and was backed by credit receivables
resulting from payroll loans to public employees. After rising steadily until 2006, the
volume of FIDC issuances has dropped since 2010 due to tightening by the CVM and the
central bank. (Exhibit 38).
There are four categories of FIDCs, depending on the type of receivables in their portfolio:
Factoring: Funds that invest in diversified receivables, such as promissory notes, trade
bills, and checks from factoring companies and credit unions.
Financial: FIDCs whose portfolios include real estate, payroll loans, personal loans, or
auto loans.
Agriculture, industry, and commerce: Comprised of receivables from the infrastructure,
commercial receivables, corporate credit, and agribusiness sectors.
Other: Funds that invest in non-performing loans and government receivables.
Currently, the bulk of FIDCs are backed by receivables from agriculture, industry and
commerce, followed by FIDCs backed by financial receivables (Exhibit 39). Since they are
easily implemented, FIDCs should establish themselves as a financing alternative for
medium and large companies.

21
The benchmark is not a promise or guarantee of profitability of the fund, but only a parameter to define
how much of the funds net NAV will be allocated to the senior shareholders upon amortization or
redemption.
13 March 2014
Exhibit 38: Volume of FIDCs Issued
Exhibit 39: Profile of Stock of FIDCs by Type of
Underlying Receivable
BRL bn % of total
0.2
1.5
5.1
8.8
14.3
12.1
12.9
9.2
12.3
7.6
4.9
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Finance
27%
Factoring
6%
Agroindustry
and trade
51%
Other
16%

Source: Brazilian Securities Commission (CVM), Credit Suisse Source: Brazilian Securities Commission (CVM), Credit Suisse
FIDC shares are registered with clearinghouses for trading in the secondary market.
Despite the strong growth in the total stock, the trading volume in the secondary market is
still very low.
7.7. Judicial Requisitions to Treasury for Budget
Appropriation and Payment of Money Judgments
(Precatrios)
Precatrios are requests by courts to treasuries for budget appropriation and payment of
final and unappealable money judgments rendered against the federal government, Federal
District, states, or municipalities. Since governments can disburse only budget-appropriated
funds, public entities are not required to immediately pay judgments rendered against them.
From a legal standpoint, these requisitions are classified as compensation for loss of
income (alimentares) and compensation for other losses (no alimentares) according to
the nature of the debt that gave rise to the order.
Alimentares: Credits resulting from salaries, compensation, proceeds, pension benefits,
social security benefits and reimbursement to individuals for injury, pain and suffering,
death, or disability; and
No alimentares: All other credits, especially for property damages, expropriations, and
contractual indemnity.
Theoretically, requisitions classified as alimentares have priority, while no alimentares
are paid by order of issuance. However, payment of no alimentares is actually faster due
to a different legal provision. According to Brazils Constitution, no alimentares
requisitions can be made in up to ten annual installments, and in the event of default on
any installment a court can order the seizure of funds of the judgment debtor (federal
government, Federal District, state, or municipality) to settle the obligation; this provision
does not apply to alimentares requisitions.
Official data on public debt released by the central bank do not account for the volume of
these requisitions as debt
22
. Therefore, from the perspective of investors and the CVM,
these requisitions are not classified as government debt bonds but rather accounts
receivablesince they represent a future payment obligationand can therefore be
included in FIDC portfolios.

22
However, requisitions issued and outstanding after May 2000 are considered debt for purposes of the
limits established in the Fiscal Responsibility Act.
13 March 2014
The Constitution states that the judgment debt will accrue adjustment for inflation and
interest at the legal rate. However, it does not specify which inflation index is to be used
for monetary adjustment purposes or which interest rate. For requisitions for payment of
judgments rendered against the federal government, courts have used the IPCA-E
23
as
the monetary adjustment index and considered the legal rate of interest as 6% per year
24
.
The absence of a clear definition of these parameters for monetary adjustment of the real
value of these requisitions for payment of judgments poses an additional risk for investors.
The volume of requisitions for payments of judgments against states and municipalities
comfortably surpasses the federal government volume. The market has a greater demand
for federal precatrios mainly due to the regularity of payments in recent years. Many
states and municipalities do not have a regular schedule for payment of precatrios, which
has resulted in a number of legal actions against state treasuries for non-performance of
obligations established by the courts
25
. In an attempt to solve this problem, a bill for
constitutional amendment (PEC) is in progress at the Senate (PEC No. 12), seeking
clearer rules for the payment of state and municipal precatrios.
7.8. Treasury Bills (LFs)
LFs are a relatively new instrument for financial institutions, and work as a bond for those
entities, as they are not allowed to issue debentures. The Brazilian Monetary Council (CMN)
(Appendix A) introduced regulations on the issuance of these securities in February 2010,
determining that LFs must have a time to maturity of at least two years and a minimum unit
price of BRL 300,000. Thus, LFs have become a suitable alternative for banks long-term
funding needs, which used to be met mainly via issuance of international bonds. Accordingly,
LFs make funding less vulnerable to external fluctuations. Issuances have been substantial,
reaching a total outstanding volume of BRL 189.3bn as of the end of May 2013 (Exhibit 40).
Exhibit 40: Stock of LFs Registered with Cetip
BRL bn
210
217
211
208 205
198
193
189
186
181
175 174
171
172
168
164
160
156
151
145
143
138
130
Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13

The return on LFs can be linked to the DI rate, to inflation, or even to fixed-rate yields, but,
as with corporate bonds, nearly 100% of LFs pay a spread over the DI rate. LFs can also
be traded in the secondary market (Cetip). Similarly to corporate bonds and Banking
Credit Notes (CCBs), the liquidity of this security is still very low.

23
The IPCA-E is released quarterly (in March, June, September, and December) and is calculated as the
cumulative IPCA-15 result for each quarter.
24
In some cases, courts have also ordered the payment of compensatory interest in addition to legal
interest of 6% p.a., especially for alimentares requisitions.
25
Theoretically, non-payment of these requisitions can result in intervention in state governments, but this
has never occurred.
13 March 2014
Exhibit 41: Features of Treasury Bills
Trading Unit
USD 50,000.00
Maturity
Contract matures on the first trading day
of the month of maturity of the contract.
BRL 0.001 per USD 1,000.00
Minimum Variation
Call or Put Options of BRL/USD Futures Contracts
Margin Deposits (Required Only of Seller)
The required margins are announced daily by the BM&F. The following assets are accepted as margin
deposits: cash, gold, fixed-income fund shares, orat the BM&Fs discretionpublic and private debt
securities, letters of guarantee, insurance policies, equity interests, and shares of closed equity investment
funds*.
* For foreign investors, the BM&FBovespa also accepts a margin deposit in dollars or bonds of the US government (T-Bonds,
T-Notes and T-Bills). The margin must be deposited into the accounts of the BM&FBovespa with the settling bank in the US.
Transaction Costs
Processing fee calculated based on value of the operation (settlement amount)
Standard transaction: 0.4%
Exercise and day trade: 0.2%
Settlement fees: 0.2% of the strike price (0.1% for combined operations)
BM&F fees: 6.32% of the basic processing fee
Transaction costs are payable on business day after day on which transaction is carried out on trading
floor.
The effective partners of the BM&F will pay, at most, 75% of basic processing fee and 75% of other
transaction costs.
Institutional investors pay 75% of the BM&F fees.
Premium of the option, in BRL per
USD1,000.00, with up to three decimal points
Price Maximum Daily Variation
No limits
Strike Prices
Set and announced by the BM&F, expressed
in BRL per USD 1,000.00
Last Trading Day
Last Trading Day of the month prior to the
month of maturity of the contract.
Features of Treasury Bills
Can be issued by full-service banks, commercial banks, investment banks, financial companies (SCFIs),
savings and loan associations, and real estate financing companies
Remuneration: fixed interest rates, combined or not with floating rates or price indexes
Minimum time to maturity: 24 months; total or partial redemption before maturity is prohibited
Can be repurchased by issuing financial institutions in an amount not to exceed 5% of total issued
Must have a unit face value greater than or equal to BRL 300,000
Earnings paid in intervals of 180 days or more

Source: BM&FBovespa, Credit Suisse

13 March 2014
8. Derivatives and Swaps
The Brazilian derivatives market is concentrated in the BM&FBovespa (Appendix A),
where future contracts of interest rates, dollar (spot and future), stock market indices
(e.g., Ibovespa) and several commodities, especially agricultural and gold, are
traded (Exhibit 42).
Swaps are directly traded between the parties (OTC market) and may be registered both
on the BM&FBovespa and on the Cetip (Appendix A). Most swap agreements are
registered on the second of those institutions, especially due to the lower operational cost
(Exhibit 43). In general, contracts registered on the BM&FBovespa involve guarantees
from one of the parties.
Exhibit 42: Breakdown of future contracts daily
volume traded on the BM&FBovespa
Exhibit 43: Total average daily volume of swap
contracts on Cetip and BM&FBovespa
BRL mn BRL bn
18
21
37
43
57
77
57
55
106
114
122
178
9
10
14
16
23
33 31
27
29 30
33
36
Interest rates futures
FX futures
2004 2012 2011 2010 2009 2008 2007 2006 2005 2003 2002 2013

0.7
1.0
0.6
0.3
0.6
0.4 0.4
0.2
0.4 0.4 0.4
0.3
1.8
1.4
1.4
1.7
2.0 2.0
3.5
1.3
1.3
2.2
2.7
4.8
BM&F
Cetip
2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Source: BM&FBovespa, Credit Suisse Source: Cetip, BM&FBovespa, Credit Suisse
8.1 Futures and Options
8.1.1. Interest rate contracts (PRE-CDI)
The variable traded is the effective interest rate on inter-bank deposits, defined as the
accrued total DI interest rate (calculated by the Cetip) for the period between the start of
the trade date and the last day of contract trading (Exhibit 44). The BM&FBovespa always
maintains open contracts for the four months following the current month and for the first
month of each quarter (January, April, July and October). In general, contracts maturing in
January of each year have the greatest liquidity.
13 March 2014
Exhibit 44: Main characteristics of future interest rate contract of BM&FBovespa
deposits: cash, gold, fixed income funds shares, andat the BM&Fs discretionpublic and private debt
securities, letters of guarantee, insurance policies, equity interests, and shares in closed equity investment
funds*.
Maximum variation of 2.0pp in relation to the
closing rate of the last trading session. The
exchange may alter the price fluctuation limit
applicable to any contract month at any time,
even during a trading session, upon 30 minutes
notice to the market.
Always in the four months after the trading date and, thereafter, in the first month of each quarter.
The contracts always mature on the 1st business day of the month of maturity.
Basic processing fee is calculated as a percentage of the difference between BRL 100,000 and the
closing price (PU) of the previous day adjusted by the CDI rate:
Day trade: 1.5%
Settlement fee: Value of the basic processing fee on the Last Trading Day
Transaction costs are payable on business day after the day on which transaction is carried out on
trading floor.
The effective partners of the BM&F will pay, at the most, 75% of the basic processing fee and 75%
of the other transaction costs. Institutional investors will pay 75% of the BM&F fees.
* For foreign investors, the BM&F also accepts a margin deposit in dollars or bonds of the U.S. government (T-Bonds, T-Notes,
and T-Bills). The margin must be deposited into the accounts of the BM&F with the settling bank in the US.
Trading Unit
BRL 100,000.00
Maturity
0.001 p.p. of the rate for the three first maturities
0.01 p.p. of the rate for other maturities
Minimum Variation
Interest Rate Futures
Transaction Costs
Annual effective interest rate, based on a 252-
business day year, rounded to the nearest
thousandth
Last Trading Day
Last business day before the maturity of the
contract.

Among derivatives traded on the BM&FBovespa, interest rate future contracts are the
ones with highest liquidity. In recent years, the total volume of trading as well the number
of open contracts increased substantially (Exhibits 45 and 46).
13 March 2014
Exhibit 45: Volume of DI interest rate future
contracts on the BM&FBovespa
Exhibit 46: Number of Open Contracts by Time to
Maturity
BRL bn Number of contracts (million)
2001 2003 2005 2007 2009 2011
138
2013
17
17
17
18
20
21
34
37
31
10
43
34
4
19
57
39
18
20
77
31
5
21
57
36
6
14
55
72
11
22
106
74
12
28
114
67
37
122
18
86
32
21
2 years or more
1 to 2 years
Less than 1 year

0.9
2001
0.7
1.6
2.1
2003
2.3
2.7
3.7
0.6
1.3
5.6
2005
3.9
1.1
1.9
6.9
3.9
2.0
2.0
7.9
2007
2.8
1.1
1.5
5.3
3.9
1.3
2.1
7.2
2009
8.2
1.9
2.9
13.0
8.0
2.8
3.1
14.0
2011
9.7
3.9
3.7
17.3
7.1
3.5
3.1
13.8
2013
2 years or more
1 to 2 years
Less than 1 year

Source: BM&FBovespa, Credit Suisse Source: Credit Suisse
Each DI interest rate future contract has a par value of BRL 100,000.00 and contracts are
traded in the form of an annual rate with three decimal points, calculated for a calendar
year of 252 business days. The price (PU) is still used in the variation margin and is
calculated using the following formula:
Where:
i
Negotiated rate of interest
n
Number of business days between the date of the transaction and the Last
Trading Day of the contract (business day prior to maturity)
= PU
100,000
+ ( 1 i )
n
252

The value of the daily adjustment of positions is calculated on a mark-to-market basis. The
Central Bank announces the adjustment price ( Pa
t
) , corresponding to the price consistent
with the reference DI rate calculated by the Cetip. The adjustment occurs accordingly to the
following:
Adjustment on the day of the transaction ( ) N M PU PA
t
AD
t
- = 1
Adjustment starting from the day after the transaction is executed AD
t
= [ ] N M FC
t
Pa
t-1
PA
t
- 2
Where:
N Number of contracts traded
M Amount, in BRL, of each point of PU (=1.0)
=
(1+CDI
t-1
) FC
t
1
252
Value of the daily adjustment, in BRL, related to day t AD
t
Adjustment price announced by the BM&F related to day t PA
t
Correction factor related to day t, calculated using the following formula
1
: FC
t
CDI interest rate for the business day prior to the adjustment day (t -1), annualized based on a
year of 252 business days.
CDI
t-1
1
If there is more than one CDI rate calculated between two consecutive trading sessions, FC
t
will be the Cumulative DI rate
of all the rates published. These situations are very sporadic and occur, for example, when the BM&F closes for a public
holiday; thus a DI rate is published for a day with no trading session.

13 March 2014
We present below an example of a CDI interest rate future contract with maturity in
January 2017. The table refers to the daily marked-to-market gains and losses, according
to the calculation presented above. The contract refers to a purchase operation (long in
PU
26
) of 150 contracts (N = 150) on 06 February, sold at 24 February 2014 (Exhibit 47).
Exhibit 47: Example of an interest rate future operation traded on BM&FBovespa
175,865.10 Total Return
10,488.00 1.000393 10.4 150 1 757 6-Feb-14
12.68
12.75
purchase
end of day
70,636
70,706
AD FC DI rate N M n Market Rate (%) PA
12.65 756 70,885 1 150 10.4 1.000393 22,664.10
12.68 755 70,864 1 150 10.4 1.000393 (7,317.94)
12.75 754 70,735 1 150 10.4 1.000393 (23,570.70)
12.86 753 70,642 1 150 10.4 1.000393 (18,038.59)
12.74 752 70,820 1 150 10.4 1.000393 22,541.86
12.68 751 70,980 1 150 10.4 1.000393 19,844.87
12.59 750 71,213 1 150 10.4 1.000393 30,714.94
12.52 749 71,428 1 150 10.4 1.000393 28,035.74
12.51 748 71,407 1 150 10.4 1.000393 (7,370.92)
12.31 747 71,767 1 150 10.4 1.000393 49,871.83
12.19 746 72,001 1 150 10.4 1.000393 30,847.09
12.15 745 72,144 1 150 10.4 1.000393 17,154.82
7-Feb-14
10-Feb-14
11-Feb-14
12-Feb-14
13-Feb-14
14-Feb-14
17-Feb-14
18-Feb-14
24-Feb-14
19-Feb-14
20-Feb-14
21-Feb-14

Source: Cetip, BM&FBovespa, Credit Suisse
8.1.2. Interest rate options
Future interest rate options traded at BM&FBovespa are European options on CDI interest rate
future contracts, i.e., they will be executed only at maturity. The seller of the option (call/put) will
receive the premium traded on the business day following the day of the transaction.
For each maturity date of future interest rate contracts, the BM&FBovespa announces the series
with option strike prices, expressed in the form of an effective interest rate for 252 business days
(Exhibit 48). The majority of the contracts are due in the first month of each quarter (January, April,
July and October), with the expiration day being the first business day of the month.

26
A long position in PU means a short position in rates, and, therefore, an expectation of reduction in the
interest rate implied in the contract.
13 March 2014
Exhibit 48: Characteristics of the future interest rate options contract on the
BM&FBovespa
The required margins are announced daily by the BM&FBovespa. The following assets are accepted as
margin deposits: cash, gold, fixed income funds shares, orat the BM&FBovespas discretionpublic and
private debt securities, letters of guarantee, insurance policies, equity interests, and shares in closed equity
investment funds*.
No limits
Basic processing fee is calculated as a percentage of the difference between BRL100,000 and the
closing price (PU) of the DI futures contract:
Standard transaction: 3.0% and day trade: 1.5%.
Each option contract refers to an interest rate future contract; fee will be charged on option's
settlement.
For combined trades, the fee charged will be that of a day trade of future interest rates (1.5%).
* For foreign investors, the BM&FBovespa also accepts a margin deposit in dollars or bonds of the U.S. government (T-Bonds,
T-Notes and T-Bills). The margin must be deposited in the accounts of the BM&FBovespa at the settling bank in the US.
Call or Put Option under Interest Rate Futures Contract
Transaction Costs
Premium of the option, expressed in BRL
Trading Unit
Each option refers to an interest rate futures
contract at a given maturity
Maturity
Maturity occurs on the first trading session of
the month of maturity of the option
BRL 0.001
Minimum Variation Strike Prices
Established and announced by BM&FBovespa,
expressed as effective interest rate (p.a.),
based on a year of 252 business days
Last Trading Day
On the maturity date of the option (day trade
operations are not allowed on this day)

The BM&FBovespa offers three types of series, which are classified according to the
period between the option maturity and the maturity of the interest rate future contract, and
a fourth type that can be freely specified by BM&FBovespa:
Future interest rate
contract matures 3
months after option
Type 1
contract matures 6
months after option
Type 2
contract matures 12
months after option
Type 3
The interest rate futures
contract this option refers
to is specified by the
BM&F
Type 4

At the expiration date, the options are automatically converted into interest rate future
contract operations. Thus, both buyer and seller have to comply with the requirements
established in the interest rate future contracts, mainly with respect to guarantee margins
and contract settlement criteria.
On the date of exercise, the holder of a call (put) option will have the option to buy (sell), at
the CDI rate, a future interest rate contract object of the option, for the traded exercise
price. In other words, the holder of a call (put) option will have a short (long) position in PU,
calculated according to the following formula:
13 March 2014
Where:
i
Negotiated rate of interest
n Number of business days between the date of the transaction and the last
trading day of the contract (business day prior to maturity)
+
=
(1
100,000
i)
PU
n
252

Interest rate option contracts were only created by the BM&FBovespa in August 2003. Their
liquidity is very low and concentrated in the Type 3 series (Exhibit 49). The number of open
contracts has increased sharply since 2009 (Exhibit 50).
Exhibit 49: Average daily trading volume of options
of interest rate futures contracts on the
BM&FBovespa
Exhibit 50: Number of interest rate options
contracts
BRL mn million contracts
0.2
2003
1.2
2004
0.2
2005
0.5
2006
1.7
2007
7.1
2008
6.5
2009
4.3
2010
8.9
2011
9.1
2012
8.1
2013

0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Call
Put
Dec-05 Dec-07 Dec-09 Dec-11 Dec-13

Source: BM&FBovespa, Credit Suisse Source: BM&FBovespa, Credit Suisse
8.1.3. IDI options
The IDI is an index published by BM&FBovespa that accrues the DI rate daily using an
annual, 252-business day compounding convention. The initial value of the index was
set at 100,000 on 2 January 2009. IDI options are related to the forward value of this
index (Exhibit 51).
13 March 2014
Exhibit 51: Characteristics of a IDI index option contract on the BM&FBovespa
Processing fee is calculated as a percentage of the value of the transaction. In the exercise, it is
charged over the settlement amount:
Standard transaction: 2.25%;
Exercise and day trade: 1.10%.
BM&F fees: 0.9% of the basic processing fee.
trading floor.
The effective partners will pay at the most 75% of the basic processing fee and 75% of the other
Transaction Costs.
Institutional investors will pay 75% of the BM&F fees.
The required margins are announced daily by the BM&FBovespa. The following assets are accepted as
margin deposits: cash, gold, fixed income funds shares, orat the BM&FBovespas discretionpublic and
private debt securities, letters of guarantee, insurance policies, equity interests, and shares in closed equity
investment funds*.
No limits
Call or Put Option of IDI Index
Transaction Costs
Premium of the option, expressed in points of
the IDI index
Trading Unit
Each option refers to the value (in points) of
the IDI index on a given maturity, multiplied by
the BRL value of each point
Maturity
Maturity occurs on the first business day of the
month of maturity of the option
0.01 points of the index
Established and announced by BM&FBovespa,
expressed in IDI index points for each maturity
Last Trading Day
Last business day before the maturity of the
contract

Because the IDI option is on an index, and not on a financial instrument that matures at
some point after the options expiration such as a futures contract), an IDI options payout
depends only on the realized path of the DI rate prior to the options maturity. On the other
hand, the payout of an option on a futures contract (such as Pre-CDI options) or on a
swap depends not only on monetary policy moves that are realized during the options life,
but also depends on any expectations of future moves during the life of the underlying
financial instrument, which could affect its value.
Representing a way to trade a pure view on monetary policy on a given time period, IDI
options had a boom in open contracts starting in 2008 (Exhibit 52), and in 2009 the
liquidity of these options became higher than that of DI futures options (Exhibit 53). Almost
all contracts are concentrated in short-term expiries (one to twelve months).
13 March 2014
Exhibit 52: Number of Open IDI Contracts on
BM&FBovespa, by Time to Maturity
Exhibit 53: Average Trading Volume of IDI Contracts
on BM&FBovespa, by Time to Maturity
Thousands of contracts USD bn
12+
4 to 12
0 to 4
1.3
3.2
5.1
15.7
3.5
3.6
0.8
1.1
2.1
0.6
0.6 1.7
3.7 3.6
10.7
20.0
2005 2006 2007 2008 2009 2010
13.9
11.9
1.9
11.5
13.4
22.8
13.9
2011 2012 2013
1.6
3.6
5.3

2.4
2.9
3.7
9.0
2005
0.7
11.1
16.1
27.9
2006
0.7
11.5
13.5
25.7
2007
5.3
19.9
3.8
29.1
2008
4.0
22.6
8.0
34.7
2009
23.4
1.5
34.8
9.8
2010
6.3
11.8
18.2
2013
3.7
32.7
43.0
2012
6.5
32.2
2011
14.7
0.6
16.9
12+
4 to 12
0 to 4

8.1.4. BRL/USD futures contracts
BRL/USD futures contracts traded on the BM&FBovespa have relatively high liquidity,
especially when compared to the deals in the spot market. In general, the liquidity of the
futures dollar contracts is concentrated in the shorter maturities (mainly in the first
maturity), despite the existence of contracts with maturity of up to six years (Exhibits 54
and 55).
Exhibit 54: Volume of Open Dollar Futures
Contracts on BM&FBovespa
Exhibit 55: Average Trading Volume of Dollar
Futures Contracts on BM&FBovespa, by Maturity
thousand contracts USD bn
0
20
40
60
80
100
120
Dec-01 Dec-04 Dec-07 Dec-10 Dec-13

4
3
2001
3 3
2003
4
1
6
1
2005
9
2
14
2
2007
15
2
12
1
2009
15
1
Other maturities
2nd maturity
1st maturity
15
2
16
2011
1
15
2013
1
1

The contract sets forth a daily adjustment of positions between buyers and sellers and
requires them both to deposit security margins in the BM&FBovespa (Exhibit 56). The
following assets are accepted as security margins: cash, gold, public and private debt
securities, letters of guarantee, insurance policies, equity shares and shares in closed
equity stock investment funds. The margins required for each contract are disclosed by the
BM&FBovespa on a daily basis, with a reduction of up to 20% for investors ranked as
hedgers by the central bank.
13 March 2014
Exhibit 56: Characteristics of a dollar futures contract on the BM&FBovespa
Upon maturity, the open positions will be settled by the BM&FBovespa using the PTAX800 FX rate,
announced by the central bank, with up to four decimal points.
The FX rate will be that verified on the last day of the month immediately prior to maturity month of the
contract, regardless of whether or not, on this day, there is a trading session on the BM&FBovespa.
Special conditions: If, for any reason, the central bank does not announce the FX rate corresponding to
the last day of the month immediately
prior to maturity of this contract, the BM&FBovespa may, at its criteria:
a) extend the settlement of the contract until the official announcement; or
b) use as a settlement value the adjustment price of the Last Trading Day or an amount arbitrated by
the BM&FBovespa, if it believes said price is not representative.
The BM&FBovespa may also, in any case, arbitrate a price for settlement of the contract if, at its
criteria, it believes the price announced by the central bank and the last available adjustment price are
not representative.
Processing fee charged on the adjustment price of the previous day, related to the first open maturity:
Standard transaction: 0.12%; day trade: 0.06%.
BM&FBovespa fees: 1.20% and 0.75% of the basic processing fee for normal and day trade
operations, respectively.
For the operations carried out exclusively on the last two trading days and for the settlement of the
contract upon maturity, the BM&FBovespa fees will be calculated based on the minimum brokerage
fee.
trading floor.
The effective partners will pay at most 75% of the basic processing fee and 75% of the other
Transaction Costs.
Institutional investors will pay 75% of the BM&FBovespa fees.
The daily oscillation limit is 5%, calculated over
the adjustment price of the previous trading
session for all the maturities open to trading.
There will be no oscillation limit for the 1
st
maturity on the last three trading days. The
BM&FBovespa may, at any moment, alter
oscillation limits via notifying the market at least
30 minutes in advance.
Future Exchange Rate (BRL/USD)
Settlement of the contracts
Transaction Costs
BRL per USD1,000.000, with up to three
decimal points
Trading Unit
USD50,000.00
Maturity
All the months up to the maximum of 24
months. Contract matures on the first trading
day of the month of maturity of the contract.
BRL0.50 per USD1,000.00
Minimum Variation
Last Trading Day

8.1.5. USD/BRL options
The dollar options traded on the BM&FBovespa follow the European pattern. Similar to the
future dollar contracts, the options are traded in lots of USD 50,000.00 and quoted as the
premium of the option in BRL per USD 1,000.00, with up to three decimal places. As in
USD/BRL futures, maturity dates of all contracts are the first business day of each month.
The liquidity of those options has increased until 2008, but has decreased in the following
years (Exhibit 57).
13 March 2014
Exhibit 57: Average daily volume of dollar futures options on the BM&FBovespa
USD mn
9
2002
6
23
2003
4
17
2004
12
12
34
2005
15
13
26
2006
40
26
21
2007
62
49
90
2008
55
35
42
2009
32
32
52
2010
Other maturities
2nd maturity
1st maturity
23
2011
19
14
2012
18
8
12
2013
15
12
25

The payments and receipts of premiums are made on the first business day after the
day of the transaction. For the settlement of the contract, the BM&FBovespa uses the
PTAX rate prevailing on the last business day of the month before that of the maturity
(Exhibit 58). Similar to the future dollar contracts, the BM&FBovespa may arbitrate the
FX settlement rate if the central bank does not announce the PTAX rate related to the
maturity date.
Exhibit 58: Characteristics of a dollar option contract on the BM&FBovespa
T-Notes and T-Bills). The margin must be deposited in the accounts of the BM&FBovespa with the settling bank in the US.
Processing fee is calculated as a percentage of the value of the transaction. For the exercise, it is
charged as a percentage of the settlement amount:
Exercise and day trade: 0.2%
trading floor.
The effective partners of the BM&F will pay, at most, 75% of the basic processing fee and 75% of the
other Transaction Costs.
Institutional investors will pay 75% of the BM&F fees.
deposits: cash, gold, fixed income funds shares or at the BM&Fs discretion, public and private debt
securities, letters of guarantee, insurance policies, equity shares and Shares in closed equity investment
funds*.
No limits
Call or put options of BRL/USD futures contract
Transaction Costs
Premium of the option, in BRL per
USD1,000.00, with up to three decimal points
Trading Unit
USD 50,000.00
Maturity
Contract matures on the first trading day of the
BRL 0.001 per USD 1,000.00
Fixed and announced by the BM&F,
expressed in Reais per USD1,000.00
Last Trading Day

13 March 2014
8.1.6. Dollar Coupon (DDI)
The dollar coupon is the accumulated difference between the DI interest rate and the FX
rate (BRL/USD) variation during the term of the contract. In this case, the interest rate is
the accumulated effective one-day interest rate on interbank deposits (DI rate, calculated
by Cetip based on a year of 252 business days), and the exchange rate variation is
measured by the change in the PTAX dollar exchange rate (in other words, the dollar
coupon is the return of a dollar investment in the domestic interest market).
Each DDI contract represents USD 50,000.00 on the maturity date and the contracts are
traded as a linear annual rate with three decimal places, based on a 360 calendar-day. The
unit price (PU) is still used in the variation margin and is calculated using the following formula:
Where:
i Trading price in rate (FX coupon)
n Number of days between the trading day and the Last Trading Day
+
=
360
1
100,000
n
i
PU

The daily adjustment of the position in BRL is determined by the following formulae:
Adjustment on the day of the transaction
1 ( )
FX
t-1
PU PA
t
AD
t
- = N M
Adjustment starting on day after transaction is executed 2 ] [ AD
t
= FC
t
Pa
t-1
PA
t
-
FX
t-1
N M
Where:
N

Number of contracts traded
M

Amount, in BRL, of each PU point (=0.5)
Amount of the daily adjustment, in BRL, related to day t
AD
t
Adjustment price announced by the BM&F related to day t
PA
t
Correction factor related to day t, calculated by the following formula
1
:
FC
t
Where:
= FC
t
+ (1 DI
t-1
)
1
252
FX
t-1
FX
t-2
DI interest rate related to the business day prior to the adjustment
day, annualized based on a year of 252 business days
DI
t-1
FX rate (PTAX) of the business day prior to the adjustment day FX
t-1

1
If there is more than one CDI rate calculated between two consecutive trading sessions, FC
t
will be the cumulative DI rate of
all the rates published. These situations are very sporadic and occur, for example, when the BM&F closes for a public holiday
and thus a DI rate is published that refers to a day with no trading session.

The dollar coupon (dollar return) of the DDI contract that is traded on the BM&FBovespa is
calculated based on the PTAX rate of the day before the deal instead of the spot rate at
the moment of the purchase. Therefore, it does not reflect the latest exchange rate value.
The dollar coupon calculated this way is known as a dirty coupon.
8.1.7. FRA of Dollar Coupon (FRC)
The FRA (Forward Rate Agreement) of Dollar Coupon (FRC) is an instrument created by the
BM&FBovespa in order to obtain a clean dollar coupon, i.e., the dollar coupon without the
FX change from the previous day to the transaction date. The FRC is not a contract, but a
transaction resulting from the combination of two DDI contracts, one long and one short. The
advantage of this instrument is that it makes it possible to trade the FRA in the spread
between DI against the USD without requiring two transactions in the DDI contract. Currently,
it is the most liquid contract involving a DDI transaction. The FRC transactions are
automatically transformed by the BM&FBovespa system into two different ones:
13 March 2014
the first transaction in the first DDI month
27
(short leg), with a term of n calendar days; and
the second transaction, of a reverse nature, for a DDI maturity identical to the FRC
maturity (long leg), with a term of m calendar days.
Short leg
Long leg
t+m t+m
t+n t+n

Each FRC contract is equivalent to a DDI contract at the long leg and a specific quantity of
contracts at the short leg. Considering the trading of q
L
FRC contracts, the number of short
leg contracts is obtained using the following formula
28
:
=
q
s
q
L
1+ c
FRC
n- m
360
Where:
c
FRC
Clean FX coupon
n Number of calendar days until maturity of short leg
m Number of business days until maturity of long leg

The dollar coupon of the short leg of FRC (c
S
) is given by the adjustment rate of the
transaction day, and the long leg coupon (c
L
) is calculated by the following formula:
1 + c
S
m
360
1 + c
FRC
n-m
360
- 1
n
360
= c
L

Consequently, after the definition of the dollar (dirty) coupons of both legs of the FRC, as
well as the quantities traded of each contract, the positions are adjusted on a daily basis
as two isolated DDI contracts (in opposite legs, i.e., long in the short leg and short in the
long leg or vice versa). After its creation in early 2001, the FRC quickly gained relevance
in dollar coupon trading, surpassing the number of average DDI traded contracts right after
its appearance and probably explaining some part of the reduction in liquidity of one-
legged DDI operations (Exhibit 59).
Exhibit 59: Average daily trading volume of DDI and FRC contracts on the
BM&FBovespa
000 contracts
12.1
8.5
20.2
5.5
2.3 2.9
2.1
3.7 4.1
1.6
4.5
3.0
4.2
34.2
38.4
46.1
66.8
41.8
29.5
42.8 42.8
35.4
42.7
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
DDI
FRA
6.7
4.5
6.1
68.3
70.2
75.3
2011 2012 2013


27
As of the first day that precedes the last trading day of the first DDI month, the first position (short leg) will be initiated in the
second DDI month, which will be kept up to the day that precedes its last trading day, when the process will be repeated.
28
The number of short leg contracts has to be rounded to the whole number nearest to that calculated by the formula.
13 March 2014
8.2. Swaps
A swap is an exchange of risk between two parties, without exchange of principal. In Brazil,
swaps are made directly between parties (OTC) and they can be registered at the Cetip
system or at the BM&FBovespa. In general, most transactions are registered at the Cetip.
In the BM&FBovespa, the swap transactions involving guarantees of some of the parties
are the main ones to be registered.
The return on a swap is the difference between the indices of each side of the transaction.
In Brazil, the main swap contracts traded have the DI interest rate in one of the legs. The
correction factor of the part indexed to the DI rate is calculated by the following formula:
(1 + DI
t-1z
)
1
252
+ 1 = FC
t
DI
1 - P
=
AFC
t
DI

t
FC
j
j=d
Where:
DI
t-1
DI interest rate corresponding to day t-1
AFC
t
Adjustment factor; cumulative between reference date
of the contract (d) and the t date
P
Discount agreed upon between the parties in relation to
DI interest rate (0 P 1)

In relation to the other indices of swap contracts, the most important are the following:
Fixed rate (PRE-DI swap)
USD (Dollar-DI swap)
IGP-M inflation (IGPM-DI swap)
IPCA inflation (IPCA-DI swap)
8.2.1. PRE-DI Swap
This type of swap exchanges a fixed rate for the accrued DI interest rate over an agreed
period. The market convention for this type of swap is to quote the fixed rate.
Where:
PRE
n
Fixed rate agreed upon between the parties
Number of business days between trading of the contract
and the last business day prior to maturity
= AFC
t
PRE
+ (1 PRE)
n
252

The final amount to be settled between the parties will be the amount equivalent to the
profitability difference of the fixed-rate and the floating rate (DI rate) accumulated in the
period multiplied by the total volume of the transaction (VI):
VL
t
= (AFC
t
- AFC
t
)
PRE DI
VI

If the difference is positive (negative), the investor at the fixed rate will receive (transfer)
the amount from (to) the investor at the DI rate.
The PRE-DI swap contract is similar to the interest rate futures contract traded on the
BM&FBovespa, except that it does not set forth the daily adjustment of positions: the
transfer of funds between the parties is effected only on the swap maturity date. However,
the liquidity of the PRE-DI swap contracts registered on the BM&FBovespa is very low
compared to that of the interest rate futures contracts (Exhibit 60).
13 March 2014
Exhibit 60: Average daily trading volume on the BM&FBovespa of PRE-DI swap
and interest rate futures contracts
USD bn
0.00
0.04
0.08
0.12
0.16
0.20
10
30
50
70
90
110
130
150
Futures
Swap (RHS)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

8.2.2. Dollar-DI Swap
The dollar-DI swap is a contract that exchanges the DI rate for a fixed rate plus the BRL-
USD exchange rate variation over an agreed period. The market convention for this type
of swap is to quote the fixed rate.
+ 1 IR
USD
FX
t-1
FX
d-1

n
360
= AFC
t
USD
Where:
FX
t-1
PTAX800 FX rate (BRL/USD) in t-1
Fixed rate agreed upon between the parties I R
Number of calendar days between trading of the
contract and the last business day prior to maturity
n
FX
d-1
PTAX800 FX rate (BRL/USD) for the day before
the reference date of the contract (d)

profitability difference of the interest rate of the contract plus the variation in the FX rate
(BRL/USD) and the floating rate (DI rate) accumulated in the period multiplied by the total
volume of the operation (VI):
VL
t
= (AFC
t
- AFC
t
)
USD DI
VI

If the difference is positive (negative), the investor long in dollar will receive (transfer) the
amount from (to) the investor with a position at the DI rate. Similar to the others, the
liquidity of these contracts is very low (Exhibit 61).
13 March 2014
Exhibit 61: Average daily trading volume on the BM&FBovespa of USD-DI and
DDI (Dollar Coupon) swap contracts
USD bn

0
100
200
300
400
500
600
700
800
USD-DI swap
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Dollar coupon (DDI)

8.2.3. IGPM-DI and IPCA-DI Swaps
These types of swaps are exchanged at two floating rates: a fixed interest rate plus an
inflation correction (IGP-M or IPCA inflation) for the accrued DI interest rate over an
agreed period. The market convention for these types of swap is to quote the fixed rate,
known as IGP-M coupon or IPCA coupon.
+ 1 I R
I nfl
I ndex
t-1
I ndex
d-1
= AFC
t
I nfl
n
252
Where:
Inflation index result (IGP-M or IPCA) in t-1 I ndex
t-1
Fixed rate agreed upon between parties I R
Number of business days between trading of the
contract and the last business day prior to
maturity
n
I ndex
d-1
inflation index result for the day before reference
date (d)

profitability difference of the fixed-rate interest rate corrected by the respective inflation
index and of the floating rate (DI rate) accumulated in the period multiplied by the total
volume of the operation (VI):
VL
t
= (AFC
t
- AFC
t
)
Infl DI
VI

If the difference is positive (negative), the investor long in inflation IGP-M or IPCA will
receive (transfer) the amount from the (to the) investor at the DI rate. The IGP-M swaps
have good liquidity in the market, and, since 2007 (same year when NTN-Cs government
bonds linked to IGP-M stopped being issued), IPCA swaps contracts have gradually
become more traded than the IGPM-DI swaps (Exhibit 62).
13 March 2014
Exhibit 62: Average daily trading volume on the BM&FBovespa of IGPM-DI and
IPCA-DI swap contracts
USD bn
84.3
152.7
158.0
342.2
229.9
158.9
80.7
111.3
0.6 0.3
5.8
135.7
77.0
50.2
69.3
145.7
2003 2004 2005 2006 2007 2008 2009 2010
IGPM-DI
IPCA-DI
111.4
50.9
72.4
197.3
194.3
155.6
2011 2012 2013

13 March 2014
9. Taxation of Foreign Investments in Brazil
In Brazil, the main taxes levied on financial investments are:
Income Tax (IR)
Tax on Financial Transactions (IOF)
9.1. Income Tax
In general, foreign investors residing in tax havens have the same tax treatment as a
Brazilian resident for income tax purposes. However, investors that do not reside in tax
havens receive different treatment. For tax purposes, Brazils Federal Revenue Service
considers a tax haven a country whose income tax rate is lower than 20% or whose laws
do not ensure transparency of the corporate structure of legal entities (Exhibit 63).
Exhibit 63: Tax Havens According to the Brazilian Federal Revenue Service
Andorra
Anguilla
Antigua and Barbuda
Netherlands Antilles
Aruba
Ascension Island
Commonwealth of the Bahamas
Bahrein
Barbados
Belize
Bermudas
Brunei
Campione dItalia
Channel Islands (Alderney, Guernsey, Jersey,
and Sark)
Cayman Islands
Cyprus
Cook Islands
Republic of Costa Rica
Djibouti
Dominica
United Arab Emirates
Gibraltar
Granada
Hong Kong
Kiribati
Labuan
Lebanon
Liberia
Liechtenstein
Macau
Madeira Islands
Maldives
Isle of Man
Marshall Islands
Republic of Mauritius
Monaco
Montserrat
Nauru
Niue
Norfolk Island
Oman
Panama
Pitcairn Islands
French Polynesia
Qeshm
American Samoa
Samoa
San Marino
Santa Helena
Saint Lucia
Saint Kitts and Nevis
Saint Pierre and Miquelon
Saint Vincent and the Grenadines
Seychelles
Singapore
Solomon Islands
Swaziland
Switzerland
Tonga
Tristan da Cunha
Turks and Caicos Islands
Vanuatu
US Virgin Islands
British Virgin Islands

Investments Subject to Special Taxation Regime
A special taxation regime is applicable to the financial investments of foreigners that,
under Resolution 2689, are not located in a tax haven (Exhibit 64).
13 March 2014
Exhibit 64: Income Tax Rates for Foreign Investors Subject to a Special
Taxation Regime
Fixed-income financial investments, carried
out on OTC markets
Shares in fixed income investment funds (short
and long maturity)
Capital gains outside the stock market
Investments in corporate fixed-income bonds
(debentures)
Interest earnings from fixed-income investments
Interest on shareholders' equity (IOE)
Investments in equity investment funds
(FIAs)
Swap operations, with or without stock market
registration
Transactions carried out on future settlement
markets outside the stock market
Public securities (starting in February 2006)
Bonds of infrastructure companies (starting in December 2011)
Shares of exclusive investment funds for non-resident investors holding at least 98% of the assets in public
securities
Capital gain on transactions carried out on securities, futures, and commodities exchanges, except swap
operations
Dividends received
15% Rate 10% Rate
Exemption

Other Foreign Investors, General Rule
Other foreign investors (i.e., foreign investors subject to Resolution 2689, residents in a
tax haven, and other foreign investors) are subject to the same tax treatment as an
individual residing in Brazil, as summarized in Exhibit 65.
Exhibit 65: Income Tax Rates for Other Foreign Investors Subject to General
Taxation Regime
Financial investments in fixed-income funds
Financial investments in public and private fixed-income bonds and swaps
Investment period:
up to 180 days: 22.5%
181 to 360 days: 20.0%
361 to 720 days: 17.5%
more than 720 days: 15.0%
Dividends
15% Rate 10% Rate
Exemption
25% Rate 30% Rate
Day-trade operations Interest on shareholders' equity (IOE)
Financial investments in fixed-income
bonds and funds
Investment period: up to 180 days
Stock market transactions and investments
in equity investment funds
Operations with derivatives on the OTC market
Regressive Rate

13 March 2014
9.2. Tax on Financial Transactions (IOF)
Until October 2009, foreign investments in the financial and capital markets were subject
to a zero IOF rate. After several increases in the IOF tax levy on these investments, the
government has recently reduced the IOF rate back to zero:
On December 1, 2011, the IOF rate on foreign investments in equities was reduced
from 2% to 0% and in infrastructure bonds, from 6% to 0%. The IOF levy on foreign
investments in ADRs was kept at 1.5% until December 24, 2013, when it was reduced
to 0%.
On June 4, 2013, the IOF rate on all fixed-income securities fell from 6% to 0%, except
for securities maturing in less than 30 days. The rate of the IOF tax declines according
to the length of the investment, from 96% for one-day investments to 0% for investments
above 30 days.
13 March 2014
Appendix A: Financial System Entities
Regulatory and Oversight Entities
National Monetary Council (CMN)
The National Monetary Council (CMN) is composed of the Finance and Planning Ministries
and the chairman of the central bank. The CMN is the main normative body of the
Brazilian financial system, and it regulates the incorporation and operation of financial
institutions and is also responsible for supervising them. It has no executive function. The
CMN is also responsible for establishing the inflation target to be pursued by the central
bank and the long-term interest rate (TJLP, chapter 4). The inflation targets are
established two years in advance and may be revised in the year before the target takes
effect. In June 2013 the CMN confirmed the inflation target for 2014 and set the target for
2015, both at 4.5%, with a +/-2.0pp intervalthe same target and tolerance range adopted
since 2006.
Central Bank of Brazil (BCB)
The Central Bank of Brazil (BCB) was created in 1965. It is an official federal body of the
Brazilian financial system. While the CMN is the principal normative body, the central bank
has executive functions in the financial system. It is responsible for enforcing compliance
with the CMNs directives and decisions regarding monetary policy and the exchange rate
system and for monitoring the activities of financial institutions. The main objective of the
central bank is to ensure stability of the local currencys purchasing power and soundness
of the Brazilian financial system, currently pursued under the inflation-targeting regime
(Decree 3088 of June 21, 1999).
Both the chairman and the governors of the central bank are appointed by Brazils president
and can be sworn in only after being approved in a Senate floor vote. Since the
implementation of the Real Plan (1994), the chairman and governors of the central bank
have had de facto autonomy, especially in the management of monetary policy. However,
their autonomy is not formally guaranteed by law and the governors do not have fixed
mandates.
The functions of the central bank include:
Managing monetary policy to meet the inflation target: One of the main institutions that
formulate monetary policies for the central bank is the Monetary Policy Committee
(Copom). The Copom is formed by the chairman and governors of the central bank and
is responsible for establishing monetary-policy directives and setting the primary interest
rate of the economy (Selic rate). From 2000 to 2005 Copom meetings were regularly
held once per month, but since 2006 the Copom has been meeting eight times a year
(every six or seven weeks) and as necessary. Extraordinary meetings can be called by
its chairman. Each meeting is divided into two parts in consecutive days, beginning on a
Tuesday. On the first day, the members of the committee discuss the macroeconomic
scenario and on the second day, the Copom sets the Selic rate and its bias. If a bias
other than neutral (i.e., a positive or negative bias) is set, the chairman of the central
bank can move the Selic basic interest rate in that direction before the next meeting.
Nevertheless, this has not occurred since June 2000, and all Copom decisions since
March 2003 have had a neutral bias. Otherwise, the target rate can only be changed at
an extraordinary meeting. The Selic rate is announced on the second day, after the
market close, and the minutes of each Copom meeting are published on Thursday on
the week following the meeting, at 8:30 a.m.
13 March 2014
Still regarding monetary policy guidance, the central bank is also responsible for
establishing the rules on capital requirement, which has been a complementary
instrument to the basic interest rate in the latest monetary cycles. Changes in and official
discussions regarding reserve requirement rates and other rules are not made on a
specific date or timeframe.
At the end of each quarter (usually on the last business day), the Inflation Report is
discussed at a Copom meeting. The Inflation Report is an important part of the inflation-
targeting regime and contains the official view of the central bank with respect to inflation
trends and the inflation projections of the central bank based on its econometric models.
Thus, it is an important instrument for signaling trends in monetary policy.
Managing international reserves: The central bank is responsible for managing Brazils
international reserves, including for making decisions on the purchase (and sale) of
dollars in the market and on investment policies. These purchases or sales are made
through authorized FX dealers (Chapter 3).
Organizing, regulating, and supervising the Brazilian financial system: The central bank
regulates the Brazilian financial system, grants authorizations, regulates the operation of
financial institutions, and is responsible for regulating bank lending. The supervisory
activities can be performed either directly or indirectly. Direct supervision is performed
by technical teams inside the central banks regional offices, according to basic
guidelines. Indirect supervision consists of monitoring, through a computer system,
financial institutions and conglomerates, regardless of any request for such supervision.
Any irregularities detected are fed into the central bank's information system
(SISBACEN), enabling direct monitoring.
Brazilian Securities Commission (CVM)
The Brazilian Securities Commission (CVM) is a federal agency subordinated to the
Ministry of Finance created in 1976 under Law 6385, as amended by Laws 10411 of 2002
and 10303 of 2001. It is administratively independentnot hierarchically subordinated to
any other entityand empowered to regulate, govern, and supervise the activities of all
capital market participants. The main objective of the CVM is to regulate and strengthen
the capital markets in Brazil. Its regulatory activities encompass all matters related to the
Brazilian securities market, such as:
registration of publicly traded companies, offers, and asset distribution (e.g., stocks and
bonds);
accreditation of independent auditors and mutual fund managers;
establishment of rules concerning the creation, operation, and operational procedures of
stock exchanges and securities trading and intermediation firms; and
suspension of issuance, distribution, or trading of a specific asset or ordering the
withdrawal of rights from stock markets.
Brazilian law empowers the CVM to investigate, analyze, and set penalties for any
irregular activity in the securities market. The supervisory activities involve monitoring the
information disclosure process and the performance of all securities traded.
The CVM comprises a superintendence body, which is in charge of developing and
implementing policies, and a general superintendency above it. Concerning foreign
investments, the Superintendency of Institutional Investor Relations (SIN) is responsible
for the registering and following up on foreign and domestic investors. The
Superintendency of International Relations (SRI) represents the CVM in dealings with
international organizations.
13 March 2014
Other Important Entities
Brazilian Association of Financial and Capital Markets Entities (Anbima)
Created at the end of 2009 from the merger of the Brazilian Association of Investment
Banks (Anbid) and the Brazilian Association of Financial Market Institutions (Andima), the
Brazilian Association of Financial and Capital Markets Entities (Anbima) represents
financial institutions of the capital and financial markets, acting as a private regulator and
supervising compliance of its members with the best practices created by the association
itself. As of the beginning of 2014, Anbima had over 309 member institutions.
In addition to its regulatory role, Anbima is also one of the largest providers of statistics to
local financial markets, using data resources previously owned by Anbid and Andima
(such institutions no longer exist as separate entities).
Brazilian Association of Investment Banks (Anbid)
Anbid was created in 1967 and represented and coordinated the activities of Brazilian
investment banks. It acted to strengthen capital markets as an instrument to finance
growth, supporting CVM as a supervisor, providing incentives to members for the adoption
of best practices and respecting investors rights, improving services and operational
practices, enhancing law, regulatory aspects and taxation of capital markets, among other
functions. In 1999, in addition to the representative and informational functions, the
company started its self-regulatory activities.
Anbid used to provide data mainly on funds, corporate finance (mergers and acquisitions,
equity and debt capital markets), private banking, and custody services.
Brazilian Association of Financial Market Institutions (Andima)
Established in 1971, Andima was a non-profit class entity whose members included
numerous financial institutions, from full-service, commercial and investment banks to
stock brokers and securities distributors.
Its main objective was to provide technical and operating support to these institutions,
encompassing daily monitoring of market behavior, legal supervision, publication of
statistical data and prices to the market, development of systems to improve financial
transactions, and provision economic analyses and reports with important information on
the Brazilian financial system.
Andima created important systems, ensuring financial transactions greater security,
transparency and agility:
The Special Settlement and Custody System (Selic), an electronic trading system for
public securities;
The Center for the Custody and Financial Settlement of Securities (Cetip), which is an
entity specialized in trading of private securities and responsible for calculating and
releasing data on the interbank deposit certificate (CDI) rate;
The Brazilian Bond System (SND), developed by Andima and operated by Cetip, where
debentures are held in custody; and
The System for Protection Against Financial Risks (SPR), which enables the registration
of swaps without guarantee, also accepting the registration of swap transactions with
delimiters (caps, floor, collar, and third curve delimiter), swaps with barriers (knock-in,
knock-out and knock-in/out), and swaptions.
13 March 2014
Andima was known for its experience in pricing government bonds. It offered the public
indicative rates for all market maturities of federal domestic public securities. It also
published statistics on stocks and the profitability and turnover of Bank Deposit Certificates
(CDBs) (such statistics are currently published by Andima). These prices have been used
as parameters for the market to rate the bonds that comprise the portfolios of financial
institutions and asset managers.
BM&FBovespa (Securities, Commodities and Futures Exchange)
After the merger between the Brazilian Mercantile and Futures Exchange (BM&F) and the
So Paulo Stock Exchange (Bovespa), the BM&FBovespa became the 17th-largest
exchange in the world, by market cap of listed companies (Exhibit 66), and the 11th
largest by market cap among companies newly listed in 2013 (Exhibit 67).
Exhibit 66: Market Cap of Companies Listed on
Stock Exchanges Exhibit 67: Ranking of World Exchanges
USD trillion, September 2013 Position
Taiwan SE Corp.
Johannesburg SE
BM&FBOVESPA
National Stock Exchange India
BSE India
BME Spanish Exchanges
NASDAQ OMX Nordic Exchange
Korea Exchange
Australian SE
Shenzhen SE
SIX Swiss Exchange
Deutsche Brse
TMX Group
Shanghai SE
Hong Kong Exchanges
NYSE Euronext (Europe)
London SE Group
Japan Exchange Group - Tokyo
NASDAQ OMX
NYSE Euronext (US)
0.8
0.9
1.1
1.1
1.1
1.1
1.2
1.3
1.4
1.5
1.5
1.9
2.2
2.6
3.1
3.5
4.2
4.5
6.0
17.4

Market
cap
Listed
companies
New listings
value (2013)
19 15 29
18 23 12
17 24 11
16 10 19
14 1 33
15 4 123
12 17 28
13 8 NA
11 7 84
10 11 NA
9 28 1
8 18 14
7 2 114
6 13 252
5 9 110
4 12 37
3 3 61
2 5 116
1 6 178
SIX Swiss Exchange
Taiwan SE Corp.
Johannesburg SE
BM&FBOVESPA
National Stock Exchange India
BSE India
BME Spanish Exchanges
NASDAQ OMX Nordic Exchange
Korea Exchange
Australian SE
Shenzhen SE
Deutsche Brse
TMX Group
Shanghai SE
Hong Kong Exchanges
NYSE Euronext (Europe)
Japan Exchange Group - Tokyo
NASDAQ OMX
NYSE Euronext (US)

Source: World Federation of Exchanges, Credit Suisse Source: World Federation of Exchanges, Credit Suisse
BM&FBovespa trades a broad range of assets, comprising operations formerly carried out
separately by BM&FBovespa and Bovespa.
So Paulo Stock Exchange (Bovespa)
The So Paulo Stock Exchange (Bovespa) traded assets, contracts and financial securities
such as stocks, options, stock futures, stock forwards, bonds, Certificates of Real Estate
Receivables (CRIs), and receivables-backed investment funds (FIDCs). It was formed by a
stock market segment and an OTC segment. The fixed-income securities were traded on
Bovespa Fix and on SomaFix, markets that traded bonds, CRIs, and FIDC shares.
Brazilian Mercantile and Futures Exchange (BM&F)
The BM&F created an environment for the trading of commodities and futures contracts in
the forward and futures segment. It comprised three clearinghousesfor derivatives (cash,
13 March 2014
forward, futures, options, and swap agreements), foreign exchange, and securitiesthat
were in charge of the settlement of all trades with a risk management structure in place to
eliminate the main counterparty risks.
Brazilian Clearing Corporation (CBLC)
The former Brazilian Clearing Corporation (CBLC), renamed Equities Settlement House,
was created in 1997 as a stock corporation resulting from a split-off of the net equity of
Bovespa. After the merger between Bovespa and BM&F in 2008, it became one of the four
clearing houses of the BM&FBovespa.
The Equities Settlement House settles transactions carried out using trading systems
PUMA and Bovespa Fix. PUMA trades equities (spot and derivatives markets, e.g.,
options, forward, and futures) and Bovespa Fix trades corporate bonds (final transactions
in the spot market).
The Equities Settlement House also acts as central depository of equities and corporate
bonds and offers a securities lending service (BTC), secured by BM&FBOVESPA.
Individual accounts make it possible to identify the final investor of the transactions
performed.
In the chain of responsibilities, the Equities Settlement House ensures settlement of the
obligations of a clearing agent to other clearing agents. Each clearing agent, in turn, is
liable for any default by brokers and qualified investors related to it. Finally, brokers are
liable for the default of their clients. As a general operating rule, all clearing agents must
make a margin deposit to cover the risks of positions under their responsibility. Based on
previously deposited margins, the Equities Settlement House grants an operating limit to
each clearing agent. In turn, each clearing agent, following their own evaluation criteria,
allocates the limit ascribed by the system among brokers and qualified investors related to
it. The operating limit may be divided among different markets.
Center for Custody and Financial Settlement of Securities (Cetip)
The Center for Custody and Financial Settlement of Securities (Cetip) was created in 1986
to meet the need of an electronic system for financial custody and settlement in the
corporate bond market. Cetip S.A. is a stock corporation that offers the following services:
registration, central depository, trading, and settlement of assets and securities. Its
activities are regulated by the Brazilian Securities Commission (CVM) and the Central
Bank of Brazil.
It is the central depository for most corporate bonds
29
, state and municipal government
bonds, and treasury bonds. As depository, it processes the issuance, redemption, and
custody of securities and, if the case, the payment of interest and other related events.
Such securities are transferred to the Cetip at the time they are registered and the
registration agent holds physical custody of them. Sale and purchase transactions are
carried out in the over-the-counter market, including those processed through CetipNet
(electronic trading system).
Cetip also calculates the DI rate (one-day interbank deposit rate), which is the average
interest rate charged in the interbank market.

29
Bank deposit certificates (CDB), non-transferable certificates of deposit (RDBs), interbank deposits (DI),
bills of exchange (LC), real estate bills (LH), bonds and commercial paper, etc.
13 March 2014
Appendix B: Requirements for Foreign
Investors
Resolution 2689/2000 of the National Monetary Council (CMN) regulates investments in
the financial and capital markets by foreign investors not residing in Brazil. According to
the Resolution, before making an investment in Brazilian assets, investors have to comply
with two basic requirements:
Appoint at least one representative in Brazil
File for registration with the CVM and Brazils Federal Revenue Service.
Appointment of Representatives in Brazil
Individual or corporate foreign investors have to appoint one or more representatives in
Brazil to the following roles:
Legal representative, who is responsible for:
- Filing for the investors registration with the CVM and the central bank and keeping
it up to date and providing these bodies with all information requested on the
investor and his/her investments
- On a monthly basis, submitting to the CVM the breakdown of the investors
portfolios
- Paying the quarterly portfolio inspection fee to the CVM
30

Fiscal representative, who is responsible for:
- Complying with the tax obligations stemming from the investors transactions
Custodian, who is responsible for:
- When requested, providing the CVM with the registrations related to the individual
investments of non-resident investors
- Notifying the CVM of all transfers of securities among different accounts held by
an investor
- Providing, on a monthly basis, information to the central bank on the positions held
in custody by non-resident investors
Filing with the CVM
The legal representative of a non-resident investor has to be registered with the CVM. The
registration consists basically of providing information on the investor and a list of the
representatives appointed in Brazil (Appendix C). Within 24 hours, the CVM will provide
the investor with an Investor Operational Code and request the investor registration as a
corporate or individual taxpayer with Brazils Federal Revenue Service, which will provide
a registration number in the Brazilian Register of Legal Entities (CNPJ) or the Brazilian
Individual Taxpayer Registry (CPF), respectively.

30
The inspection fee is paid on a quarterly basis, and the calculation basis is the net asset value of the
portfolio, as ascertained on 31 December of the previous year. For a net asset value of up to BRL 4.15
million, the fee is 0.1% of the net asset value. For portfolios with a net asset value above BRL 4.15
million, the fee is BRL 7,872.65.
13 March 2014
Appendix C: Form for Foreign Investors
Registration with the CVM
Filing Form for Non-Resident Investors Registration with the CVM (click
here to access the form)
A. Identification of the non-resident investor
1. Individual or company name of the investor:
2. Address:
City:
State or province:
Country of headquarters/domicile:
Postal code:
Nationality:
3. Internet address:
4. Country of incorporation:
5. Description:
a. ( ) Commercial banks, investment banks, savings and loan associations,
global custodians and similar institutions, regulated and monitored by the
relevant governmental authorities;
b. ( ) Insurance companies regulated and monitored by the relevant
governmental authorities;
c. ( ) Corporations or entities whose purpose is the distribution of issue of
securities or act as underwriters in the trading of securities, acting on their
own account or for other parties, registered and regulated by bodies
recognized by the CVM;
d. ( ) Pension funds regulated by the relevant governmental authorities;
e. ( ) Non-profit institutions as long as regulated by the relevant governmental
authorities;
f. i. Any entity whose purpose is the investment of funds in money and capital
markets in which only those individuals and legal entities residing and
domiciled abroad participate, provided it is registered and regulated by an
entity recognized by the CVM;
g. ii. Any entity whose purpose is the investment of funds in money and capital
markets in which only those individuals and legal entities residing and
domiciled abroad participate, provided that the portfolio is managed on a
discretionary basis by a professional manager registered and regulated by an
entity recognized by the CVM.
h. ( ) Other collective investment funds or entities;
i. ( ) Legal entities incorporated abroad;
j. ( ) Individuals domiciled abroad.
13 March 2014
6. Type of investor:
a. ( ) Account holder of own account;
b. ( ) Name holder of an omnibus (collective) account;
c. ( ) Participant (passenger) in omnibus account:
_______________________________
B. Identification of the representative
1. Representative
Name or corporate name:
Address:
City: State:
CEP:
Telephone: Fax:
CNPJ/CPF:
Legal status: Area of activity:
Internet Address:
Responsible for registration:
( ) Yes
( ) No
2. Jointly responsible representative referred to in Paragraph 2. of art.3 of this
resolution (if applicable)
Name of individual or company
Address:
City: State:
CEP:
Telephone: Fax:
CNPJ/CPF:
Legal status: Area of activity
Internet address:
C. Tax status of investor in Brazil
1. Taxes on capital gains:
( ) Exempt
( ) Not exempt
2. Taxes on earnings:
( ) Exempt
( ) Not Exempt
3. Tax representative of the investor
Name:
Address:
CPF/CNPJ:
13 March 2014
D. Investor declaration:
I hereby declare, under penalty of law and for purposes of this document, that the
information provided herein is true, and that I accept the responsibilities entailed in
furnishing such information.

--------------------------------------------------------------------------------

Signature of non-resident investor Date

--------------------------------------------------------------------------------

Representatives signature

--------------------------------------------------------------------------------

Signature of jointly responsible party

E. Identification codes:

CVM code:
RDE No.:

____________________________________________________________________________
13 March 2014
Appendix D: Brazil Local Markets in LOCuS
Introduction
LOCuS is a toolbox available to Credit Suisse clients that compiles information on the
fixed-income markets of various countries (including developed countries and emerging
markets). LOCuS provides information on sovereign and private fixed-income bonds,
financial derivatives, especially interest rates and currency derivatives. In addition to
information on financial assets, the system also provides Credit Suisse reports and
forecasts for the main macroeconomic variables for covered countries.
LOCuS enables the user to obtain and manipulate data within the system itself, using
calculation spreadsheets, graphs and statistical analysis tools. The system also enables
the user to share data with other users of the system and with the sales team of Credit
Suisse, via instant massages or e-mail. Users can use the pages already provided by
Credit Suisse or create their own pages, incorporating the information they wish to track.
The system also enables these pages to be shared with other users.
There is no need to install any software in the users machine in order to access LOCuS.
All you have to do is access Credit Suisses website and follow these steps:
Open the URL: http://www.credit-suisse.com/locus/
Click on your region on the map to access the closest server
Type in your username and password (which you must request from the sales team)
The main screen of LOCuS will be shown in a new window in the Internet navigator. The
form of navigating on LOCuS is similar to that of the Internet, with access to the pages via
links (Exhibit 68).
Exhibit 68: LOCuS Main Screen


13 March 2014
Brazil in LOCuS
The pages related to Brazilian financial assets are in the Emerging Mkts LATAM
Brazil folder (Exhibit 69).
Exhibit 69: Brazil Home Page in LOCuS

Assets Traded in the External Market
For this category, you can find data, graphs and research reports related to Brazilian
financial assets traded in international markets, including:
Sovereign external bonds (BRA Sov Bond Grid folder): complete list of the sovereign
bonds traded abroad, broken down by currency, with the characteristics of the bonds
and trading prices.
Credit Default Swap (Sov CDS Mkt folder): section dedicated exclusively to CDS, with
pricing, scenario and historical analysis.
Relative performance (Intra-Country folder): contrasts performance of different Brazil
bonds, Exhibit 70.
13 March 2014
Exhibit 70: Brazil Home Page in LOCuS, Local Markets, Intra-Country Folder

Source: Company reports
Assets Traded in the Local Market
This section presents the main financial assets traded in the local market, as well as the
publications containing the recommendations of Credit Suisses team of fixed-income
strategists.
Government Bonds (BRA Local Govt Bonds folder): page with the descriptions of
the main federal public bonds traded in the local market. The main page presents the
data series of the interest rates implicit in the main bonds (LTNs, NTN-Bs and NTN-Fs),
as well as the breakeven inflation implicit in the NTN-Bs, which are bonds linked to IPCA
inflation (Exhibit 71). In addition to yield and market price data, the page has links to
access the monthly timetable of auctions announced by the Treasury, as well as the
results of the latest auctions and the rates and trading volumes in the secondary market.
There is also a page dedicated exclusively to NTN-Bs, in the NTNB folder, showing yield
curves and historical comparisons for the different tenures of these bonds.
13 March 2014
Exhibit 71: Brazil Page in LOCuS, Local Markets, Government Bonds Folder

NTNB: The NTNB Inflation-linked Bond Calculator lets the user override the Settle Date,
Inflation Rate and Yield of the inflation-linked Brazilian NTNB bonds, and calculate the
resulting price, duration, and convexity.
PRE-CDI: Information on interest rate futures contracts with fixed maturity dates (traded
on the BM&FBovespa), as well as the profitability implicit in the contracts for maturities
in moving windows, of six months to ten years. In the drop-down of the PRE-CDI folder
(Exhibit 72), you can access various calculation tools, as well as the data series of the
rates traded.
13 March 2014
Exhibit 72: Brazil Page in LOCuS, Local Markets, PRE-CDI Folder

Country Research: On this page you can find a list of the latest strategy and economics
reports for Brazil, organized by date, displaying a small summary for each publication
(Exhibit 73).
13 March 2014
Exhibit 73: Brazil Page in LOCuS, Research

Functions of LOCuS
Among the various functionalities of LOCuS are Historical Analysis, used to create charts
for analyzing and monitoring data, and My Sheets, which allow users to build their own
customized tools and monitors. Below, we will briefly describe how to use these resources.
Historical Analysis
In this example, we will create the historical breakeven inflation graph calculated from the
NTNF-17 and the NTNB-17 using the following expression:

( )
( )
1
1
1
-
+
+
=
NTNB
NTNF
NTNB
Y
Y
BE

1. In the menu on the left hand side, click in Tools Hist Analysis
2. Create a new workspace by clicking in New Workspace (or choose one of the existing
workspaces)
3. Click in the Expression field; in the first line A, type the beginning of the breakeven
inflations expression: (1+
13 March 2014
4. Click on the Instruments button. A screen will appear containing all the assets
registered in LOCuS. Search for NTN-F Jan17 in the path: Emerging Markets Bond
LC Sov Latam Brazil BNTNF BNTNF 10.000 01/01/2017
31

5. In Fields, on the right hand side, choose Yield Ask Close (Yld Ask (Cls) ) in the
All fields tab and then click in the Select button to paste the NTN-F yield in the
expression of the breakeven inflation we are writing.
6. The series [BNTNF 10.000 01/01/2017: Yld Ask (Cls)] returns the yield of the bond as
a percentage. Thus, you should divide the result by 100. As a result, the expression
would be: (1+ BNTNF 10.000 01/01/2017: Yld Ask (Cls)]/100)
7. Type in the remainder of the breakeven inflation, repeating the previous step for the
NTN-B yield (in the Instrument Chooser Window, in the Emerging Markets Bond
LC Sov Latam Brazil BNTNB tab). The result should be:
(1+[BNTNF 10.000 01/01/2017: Yld Ask (Cls)]/100)/
(1+[BNTNB 6.000 05/15/2017: Yld Ask (Cls)]/100)-1
8. In order to obtain the amounts as a percentage, multiply by 100. As a result, the final
expression would be:
((1+[BNTNF 10.000 01/01/2017: Yld Ask (Cls)]/100)/
(1+[BNTNB 6.000 05/15/2017: Yld Ask (Cls)]/100)-1)*100
9. In the Date Options field, choose the number of preceding months from the current
date that will be displayed in the chart. Additionally, choose a name for the curve to be
displayed in the Title field.
10. Now your graph is ready to be displayed. To do so, simply check the box next to the
expression under the Draw column and click in Draw Chart (Exhibit 74).

31
Note that the number 10,000 represents the annual interest rate of coupons, and the date 01/01/2017
represents the bonds maturity date
13 March 2014
Exhibit 74: Historical Analysis Feature

LOCuS also offers resources ranging from simple arithmetic operations to more
sophisticated manipulations, such as econometric regressions. The full list with the
available features and their descriptions may be accessed by clicking on the Formula
button on the right hand side of the Instrument button.
My Sheets Feature
The My Sheets tool allows users to create customized pages in LOCuS. For this purpose,
it has a set of tools called Components, which allow users to create graphs, insert
spreadsheets or perform statistic data analyses. Also, it allows users to paste any graphs
or tables from other LOCuS pages, assembling a page with the data that the user wants to
track.
The example below presents the procedure to build a table with yields, prices and other
analytics of some Brazilian bonds.
1. On the upper toolbar, click in the File New Spreadsheet menu.
13 March 2014
2. In the spreadsheet, select the cell to enter data and click in the Tools Instrument
Chooser menu.
3. Select the bond in Emerging Markets Bond LC Sov LATAM BRAZIL
BRAZIL 10.250 01/10/2028. Select the bonds fields in Select Fields Yld Ask and
then click in Select in order to paste the Global 2028 USD yield in the spreadsheet.
Return to the spreadsheet, click in the expression field and hit Enter to confirm it.
Select another cell and repeat this procedure to choose other fields (e.g., Price, DV01,
Duration, Convexity).
Similar to Historical Analysis, the Spreadsheet component also has many features to
manipulate data. The full list with the available features and their descriptions can be
accessed by clicking with the right button of your mouse in any cell of the spreadsheet,
and then choosing Insert Function.
Charts and other components can also be imported from pre-existent pages, by right-
clicking on the wanted component and then clicking on Copy Chart / Spreadsheet /
Color Grid to Clipboard and then right-clicking on the background of the blank page and
then on Paste component(s). After editing the new page, it is possible to save it with a
custom name, by clicking on the File Save menu, and reload this page in the File
Open menu.
13 March 2014
List of Web Sites
32

Financial Market Associations
Brazilian Association of Financial and Capital Markets Entities (Anbima)
http://www.anbima.com.br
Exchange
BM&FBovespa (securities, commodities and futures exchange)
http://www.bmfbovespa.com.br/en-us/home.aspx?idioma=en-us
Clearings and Depository
Center for the Custody and Financial Settlement of Securities (Cetip)
http://www.cetip.com.br/?lang=en-us
Special Settlement and Custody System (Selic)
http://www.bcb.gov.br/?FEDSECURITIES
Financial Market Structure
http://www.bcb.gov.br/?COMPOSITION
Economic Data
Central Bank of Brazil
http://www.bcb.gov.br/?TIMESERIESEN
Data from Brazils Applied Economic Research Institute (IPEA)
http://www.ipeadata.gov.br
Brazilian Statistics Bureau (IBGE)
http://www.ibge.gov.br/english/
Fiscal Policy
http://www.bcb.gov.br/?FISCPOLICY
Treasury
https://www.tesouro.fazenda.gov.br/en/fiscal-policy/fiscal-planning/central-government-
primary-balance
Public Debt
http://www.bcb.gov.br/?DOMESTIC
Treasury
https://www.tesouro.fazenda.gov.br/en/
Monetary Policy
Minutes of the meetings of the Monetary Policy Committee
http://www.bcb.gov.br/?COMMITTEE

32
Credit Suisse has not reviewed the sites and has no liability for their content. The above links are provided
solely for convenience and information purposes. Following this link or any other link on Credit Suisse's
Web site will be at your own risk.
13 March 2014
Inflation-targeting system
http://www.bcb.gov.br/?INFLATION
Inflation Report of the Central Bank of Brazil
http://www.bcb.gov.br/?INFLAREPORT
Market Readout (weekly report) of the Central Bank of Brazil
http://www.bcb.gov.br/?MARKETREADOUT
Market Readout (time series data) of the Central Bank of Brazil
http://www.bcb.gov.br/?TIMESERIES
Other Information
Brazil Excellence in Securities Transactions (BEST Program)
http://www.bestbrazil.org.br
Regulation of Interest to Foreign Investors (CVM)
http://www.cvm.gov.br/ingl/regu/regu.asp
Government Resources
Brazils government official portal
http://www.brazil.gov.br
http://www.bcb.gov.br/?english
Receita Federal do Brasil (Brazil's Federal Revenue Service)
http://www.receita.fazenda.gov.br/Principal/Ingles/Versao2/default.asp
Brazilian Securities Commission (CVM)
http://www.cvm.gov.br/ingl/indexing.asp
Ministry of Finance
http://www.fazenda.gov.br
Treasury
https://www.tesouro.fazenda.gov.br/en/fiscal-policy/fiscal-planning/central-government-
primary-balance
News Sources
Folha de So Paulo
http://www1.folha.uol.com.br/internacional/en/
O Estado de So Paulo
http://www.estado.com.br
O Globo
http://www.oglobo.com
Valor Econmico
http://www.valor.com.br/

GLOBAL FIXED INCOME AND ECONOMIC RESEARCH
Dr. Neal Soss
Global Head of Economics and Demographics Research
(212) 325 3335
neal.soss@credit-suisse.com
Ric Deverell
Global Head of Fixed Income and Economics Research
+44 20 7883 2523
ric.deverell@credit-suisse.com

ECONOMICS AND DEMOGRAPHICS RESEARCH

GLOBAL / US ECONOMICS
Dr. Neal Soss
(212) 325 3335
neal.soss@credit-suisse.com
Jay Feldman
(212) 325 7634
jay.feldman@credit-suisse.com
Dana Saporta
(212) 538 3163
dana.saporta@credit-suisse.com
Isaac Lebwohl
(212) 538 1906
isaac.lebwohl@credit-suisse.com
Axel Lang
(212) 538 4530
axel.lang@credit-suisse.com
Xiao Cui
(212) 538 2511
xiao.cui@credit-suisse.com
LATIN AMERICA (LATAM) ECONOMICS
Alonso Cervera
Head of Latam Economics
52 55 5283 3845
alonso.cervera@credit-suisse.com
Mexico, Chile
Casey Reckman
(212) 325 5570
casey.reckman@credit-suisse.com
Argentina, Venezuela
Daniel Chodos
(212) 325 7708
daniel.chodos@credit-suisse.com
Latam Strategy
Juan Lorenzo Maldonado
(212) 325 4245
juanlorenzo.maldonado@credit-suisse.com
Colombia, Peru
Di Fu
(212) 538 4125
di.fu@credit-suisse.com
BRAZIL ECONOMICS
Nilson Teixeira
Head of Brazil Economics
55 11 3701 6288
nilson.teixeira@credit-suisse.com
Daniel Lavarda
55 11 3701 6352
daniel.lavarda@credit-suisse.co
Iana Ferrao
55 11 3701 6345
iana.ferrao@credit-suisse.com
Leonardo Fonseca
55 11 3701 6348
leonardo.fonseca@credit-suisse.com
Paulo Coutinho
55 11 3701-6353
paulo.coutinho@credit-suisse.com
EURO AREA / UK ECONOMICS
Neville Hill
Head of European Economics
44 20 7888 1334
neville.hill@credit-suisse.com
Christel Aranda-Hassel
44 20 7888 1383
christel.aranda-hassel@credit-suisse.com
Giovanni Zanni
44 20 7888 6827
giovanni.zanni@credit-suisse.com
Violante di Canossa
44 20 7883 4192
violante.dicanossa@credit-suisse.com
Steven Bryce
44 20 7883 7360
steven.bryce@credit-suisse.com
Mirco Bulega
44 20 7883 9315
mirco.bulega@credit-suisse.com

EASTERN EUROPE, MIDDLE EAST AND AFRICA (EEMEA) ECONOMICS
Berna Bayazitoglu
Head of EEMEA Economics
44 20 7883 3431
berna.bayazitoglu@credit-suisse.com
Turkey
Sergei Voloboev
44 20 7888 3694
sergei.voloboev@credit-suisse.com
Russia, Ukraine, Kazakhstan
Carlos Teixeira
27 11 012 8054
carlos.teixeira@credit-suisse.com
South Africa
Gergely Hudecz
33 1 7039 0103
gergely.hudecz@credit-suisse.com
Czech Republic, Hungary, Poland
Alexey Pogorelov
7 495 967 8772
alexey.pogorelov@credit-suisse.com
Russia, Ukraine, Kazakhstan
Natig Mustafayev
44 20 7888 1065
natig.mustafayev@credit-suisse.com
EM and EEMEA cross-country analysis
Nimrod Mevorach
44 20 7888 1257
nimrod.mevorach@credit-suisse.com
EEMEA Strategy, Israel

JAPAN ECONOMICS NON-JAPAN (NJA) ECONOMICS
Hiromichi Shirakawa
Head of Japan Economics
81 3 4550 7117
hiromichi.shrirakawa@credit-suisse.com
Takashi Shiono
81 3 4550 7189
takashi.shiono@credit-suisse.com

Dong Tao
Head of NJA Economics
852 2101 7469
dong.tao@credit-suisse.com
China
Robert Prior-Wandesforde
65 6212 3707
robert.priorwandesforde@credit-suisse.com
Regional, India, Indonesia, Australia
Christiaan Tuntono
852 2101 7409
christiaan.tuntono@credit-suisse.com
Hong Kong, Korea, Taiwan
Dr. Santitarn Sathirathai
65 6212 5675
santitarn.sathirathai@credit-suisse.com
Regional, Malaysia, Thailand
Michael Wan
65 6212 3418
michael.wan@credit-suisse.com
Singapore, Philippines
Weishen Deng
852 2101 7162
weishen.deng@credit-suisse.com
China
GLOBAL DEMOGRAPHICS & PENSIONS RESEARCH
Dr. Amlan Roy
Head of Global Demographics
44 20 7888 1501
amlan.roy@credit-suisse.com
Sonali Punhani
44 20 7883 4297
sonali.punhani@credit-suisse.com
Angela Hsieh
44 20 7883 9639
angela.hsieh@credit-suisse.com

Disclosure Appendix
Analyst Certification
Nilson Teixeira, Leonardo Fonseca, Daniel Lavarda, Iana Ferrao and Paulo Coutinho each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this
report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific
recommendations or views expressed in this report.
References in this report to Credit Suisse include all of the subsidiaries and affiliates of Credit Suisse operating under its investment banking division. For more information on our structure, please use the following link:
https://www.credit-suisse.com/who_we_are/en/This report may contain material that is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Credit Suisse AG or its affiliates ("CS") to any registration or licensing
requirement within such jurisdiction. All material presented in this report, unless specifically indicated otherwise, is under copyright to CS. None of the material, nor its content, nor any copy of it, may be altered in any way,
transmitted to, copied or distributed to any other party, without the prior express written permission of CS. All trademarks, service marks and logos used in this report are trademarks or service marks or registered trademarks
or service marks of CS or its affiliates. The information, tools and material presented in this report are provided to you for information purposes only and are not to be used or considered as an offer or the solicitation of an
offer to sell or to buy or subscribe for securities or other financial instruments. CS may not have taken any steps to ensure that the securities referred to in this report are suitable for any particular investor. CS will not treat
recipients of this report as its customers by virtue of their receiving this report. The investments and services contained or referred to in this report may not be suitable for you and it is recommended that you consult an
independent investment advisor if you are in doubt about such investments or investment services. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or
strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. CS does not advise on the tax consequences of investments and you are advised to contact
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