The Brazilian sovereign wealth fund – “Fundo Soberano do Brasil-
FSB” was created by the Law 11,887/2008 and has the objective of
promoting investments in Brazil and abroad, generating public
savings, mitigating the effects of economic cycles, and fostering
strategic projects at home and abroad. The Deliberative Council of
the FSB - CDFSB, which is composed by the Minister of Finance, the
Minister of Planning, Budget and Management, and the Chairman of the
Central Bank of Brazil – BCB, is responsible for approving the
general guidelines and goals of FSB’s investments, while the
Brazilian National Treasury is responsible for operating the FSB, as
established by Decree 7,055/2009.
Historic BackgroundThe Decree 7,055/2009 has brought the following rules for the
FSB:
1) the benchmark for foreign investments is the six-month LIBOR;
2) the benchmark for domestic investments is the TJLP (a long run
rate as determined by the National Monetary Council);
3) financial statements shall be published twice a year; and
4) financial assets are required to be rated as investment grade by
at least two rating agencies.
On 12/30/2008, R$ 14,243,999,592.36 were allocated to the FSB
through the issuance of 10,201,373 domestic bonds issued by the
National Treasury. On that date, FSB invested the full amount in the
Fundo Fiscal de Investimento e Estabilização (Fiscal Fund for
Investment and Stabilization) - FFIE, according to the Law
11,887/2008. That is a mutual fund, duly registered at the
Securities and Exchange Commission of Brazil (Comissão de Valores
Mobiliários - CVM) which has the FSB as its exclusive investor.
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