Financing incentives Norway - Brazil 17 February 2010 Bergen Manifestasjon Bergen Arne-Christian Haukeland

2 Agenda  DnB NOR's international competence in Bergen  Framework for financing in Brazil  Financing Brazilian built vessels – new regulations  Long term financing for other projects – various alternatives  Commercial banking facilities in Brazil

3 DnB NOR in Bergen  Emerging Markets group in Bergen 2 teams »Asia and Eastern Europe »Latin America, Middle East, Africa 7 associates with extensive experience in the field of »Trade Finance »ECA financing »Market knowledge »International banking relationships  Shipping department Offshore supply 18 associates  Seafood Global Seafood team headed from Bergen 11 associates

4 DnB NOR – International Presence DnB NOR offers reliability, long-term commitment

5 Framework for financing in Brazil  Only BRL allowed in Brazil, with few exceptions  Brazilian companies can only hold foreign currency accounts abroad for a limited time  CELIC currently at 8,75 %  Limited but increasing knowledge of "Norwegian" industries in Brazilian banks  Strong drive on local content in all areas  Possible thin capitalisation rule coming

6 Good financial incentives in Brazil - Merchant Marine Fund Created in 1958 Purpose: to finance the yard & shipping industry Funding source: tax on freight charged on imports (lately also directly from Ministry of Finance) FMM is part of the Ministry of Transportation Three agents for the fund: BNDES, Banco do Brasil Banco do Nordoeste

7 FMM financing scheme – the new framework Offshore vessels Domestic content Brazilian navigation company Over 60%Under 60% Interest pa% TotalInterest pa% TotalTerm Domestic2 – 4.5%902 – 4.5%9020 years Imported3 – 6%704 – 7%6020 years Application has to be filed with one of the agents no later than 90 days after approval

8 BNDES has various options for other projects  BNDES FAT (workers fund) TJLP + sector spread + margin »TJLP currently at 6 % Approx 8-11% depending on sector and company BRL All applicants must be rated by BNDES  BNDES Exim Financing Brazilian capital goods exports Terms »Up to 100% of value »Up to 12 years »Libor + margin (case by case) Used by Petrobras, Embraer etc  BNDES Finem Oil & gas development, production Terms »60-70 % (up to 80% in BRL) »TJLP + sector spread + margin »Sector spread oil & gas 1.3%-1.8% Complicated regulations

9  At inception, the Lender grants a local currency loan payable in USD to its local counterparty and hedges local currency exposure via cross currency swap with Local Bank (swap provider).  The Lender delivers USD to Local Bank which are converted to local currency at fixing and deposited into the local counterparty’s account.  On each coupon payment date local counterparty deposits local currency amounts in its local account, which are converted into USD at fixing and delivered to the Lender (as specified in the loan contract). Local currency Initial Exchange Local financing alternatives USD Initial Exchange FX at fixing Loan in local currency payable in USD Offshore Delivers local currency Delivers USD Local counterparty Lender Graph shows payment mechanism at the beginning of the transaction Local Bank

10 Good contacts for companies doing business in Brazil INTSOK - Brazil supplier catalogue