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Pedro Bianchi, head of Brazil DCM at Bank of America Merrill Lynch, was involved in another of this year’s landmark transactions when BAML, along with Morgan Stanley and Santander, took advantage of the country’s adoption of IFRS accounting standards to design a perpetual hybrid for utility company Energesia. The R$200 million ($122 million) deal shows that within a market that is creating headlines in terms of total volumes, record individual deal amounts, new currencies and record tenors, there is room for more subtle innovation. With the hedging of principal prohibitively expensive, IFRS enables the principal of perpetual bonds to be accounted for as equity, avoiding any currency volatility affecting the issuer’s net income.
