Data from ANBIMA (Brazilian Association of Financial and Capital Market Institutions) indicate that fixed income had the highest relative monthly share in the capital markets in September this year since September 2018. The economic scenario of high interest rates makes fixed income securities more attractive. And the winner goes to the Commercial Note.
One year ago, in September 2021, commercial notes gained a specific regulation to make them simpler and safer, by means of the enactment of the Business Environment Law (Law No. 14,195). Such law contained specific provisions for such instrument. During the past year, 2,867 commercial notes were issued, all by public offerings with restricted efforts. This year, until August, the issuance numbers already totaled 18,307, that is, an exponential growth, which demonstrates that this paper is here to stay!
The commercial note is a new product in the capital markets – and must comply with the rules applicable to public offerings of similar securities (CVM Instructions No. 400 and No. 476). It differs from the promissory note and does not follow the same rules for this instrument, which are provided by CVM Instruction No. 566.
Among the flexibilities brought by the 2021 law, the highlights are (i) the possibility of issuing commercial notes by limited companies and cooperatives, in addition to corporations, a practice already regulated by the CVM, but which was not yet expressed in legislation; (ii) the waiver of the need for physical issuance, since the issuance will be carried out exclusively in book-entry form, providing more agility and security to the issuance and entitlement process; (iii) the possibility of amortization and intermediate payment of interest, a practice previously prohibited; and (iv) the possibility of conversion into equity interest in limited liability companies and cooperatives in private issuances.
The new model makes commercial notes more attractive to companies and potential investors, as they become quick and less rigid financing tools than promissory notes (which have a maximum maturity of 360 days from their issuance), providing a reduced cost access to credit and operational security.
Although commercial notes are similar to debentures as they are debt securities traded on the capital markets and issued by companies, there are considerable differences between them. For example, the possibility of the commercial notes being redeemed equally and successively, without having to carry out a lottery, as is required for debentures. Also, there is the possibility of the issuer acquiring the commercial notes above the PU (unit price), without the need to comply with Instruction CVM nº 77. However, B3 (Brazilian Stock Exchange) is still carrying out parameterizations in its system to adapt it to this new product. Therefore, all the new possibilities provided by law will take some time to be registered in the system in a more automated way.
The new regulation provided a reduction in time, cost, and risk to operations with commercial notes. This product will be increasingly used as a tool for quick, simple and secure financing, as can be shown from the results of 2022 so far.
