BRAZIL ANNOUNCES ITS FIRST SUSTAINABLE DOLLAR BOND ISSUE RESULTS

The National Treasury reports the outcome of its operation in the US dollar market, with the issuance of a new 7-year benchmark, named GLOBAL 2031 ESG.

The GLOBAL 2031 ESG matures on March 18, 2031, and was issued in the amount of USD 2.0 billion, with an investor return rate of 6.50% p.a., corresponding to a spread over the U.S. Treasury bond reference of 181.9 basis points, the lowest level in new issuances in almost a decade. The sustainable bond as interest rate coupon of of 6.25% p.a., with payments due on March 18 and September 18 of each year. The issuance was carried out at a price of 98.572% of its face value.

The issuance represents a new milestone in the management of the Federal Public Debt by reaffirming the Republic's commitment to sustainable policies, which is in line with the growing interest of non-resident investors, and the expansion of thematic bond market worldwide. Following the announcement of the Brazilian Framework for Sustainable Sovereign Bonds, which was developed by the Sovereign Sustainable Finance Committee (CFSS), involving support from the Inter-American Development Bank (IDB) and the World Bank, the National Treasury carries on its strategy, committing to allocate the amount equivalent to the funds raised to actions that promote sustainability and contribute to climate change mitigation, conservation of natural resources, and social development, in the proportions indicated in Table 1 below:

Regarding the time allocation of resources, the indicative composition is that a minimum of 75% should be dedicated to financing new expenses and a maximum of 25% should be dedicated to refinancing already executed or ongoing expenses. To provide transparency to the considered allocation categories, Brazil presented, in the pre-issuance report, an indicative listing of categories that can be considered for green and social expenses[1].

The issuance reinforces the external debt important role in terms of term lengthening, investor base and indexes diversification. Additionally, it strengthens the role of the external Federal Public Debt in providing a benchmark for the corporate sector, which is the reason why the National Treasury chose a 7-year benchmark, where private issuances are concentrated.

The first issuance of sustainable bonds by the National Treasury attracted significant interest from investors, as evidenced by more than 240 orders at the peak of the order book. Demand greatly exceeded the issued volume, with the order book reaching approximately USD 6.0 billion. The final allocation had substantial participation from non-resident investors, with about 75% coming from Europe and North America. Latin America region, including Brazil, accounted for 25%. The issuance was mostly absorbed by long-term investors, with asset managers acquiring approximately 60% of the bonds, and had significant demand from ESG accounts, participants in the non-deal road show conducted by Brazil in early September 2023.

The operation was led by Itaú, J.P. Morgan, and Santander. The financial settlement will take place on November 20, 2023.

This communication is for informational purposes only and does not constitute an offer to buy or sell or a solicitation of an offer to sell or buy any securities. There will be no offer or sale of securities in any country or jurisdiction in which such offer, solicitation, or sale would be unlawful if made before registration or qualification under the securities laws of the relevant country or jurisdiction.

The issuer has filed a registration statement, including a prospectus, with the U.S. Securities and Exchange Commission (SEC) for the offering to which this communication refers. Before investing, for more complete information about the issuer and this offering, you should read the prospectus contained in the registration statement and other documents that the issuer has filed with the SEC. You can obtain these documents for free by accessing EDGAR on the SEC's website at www.sec.gov. Alternatively, the issuer, any underwriter, or any distributor participating in the offering will arrange to send you the prospectus if you request it by contacting Banco Itaú BBA USA Securities Inc. at +1-212-710-6749, J.P. Morgan Securities LLC at +1-212-834-4533, and Santander US Capital Markets LLC at +1-855-403-3636.