LTN Information

Friday, May 03, 2019 12:23 PM By MG

Important Notices: 
As indicated in the LTN information presented elsewhere in this website, we no longer required to obtain "current" BCB Transport Authorizations and proof of "current" GRU payments before submitting a file to the program for registration. The new requirements are presented below. Also, please ensure that any package you send to MG Capital has current front and back photos of the physical LTN(s). 

Our History with LTN's

Since 2013 the MG Capital Group (MGCG) LTN Team with help of its partners has evaluated and tested over a 100 different LTN Trade and/or Sale Programs (programas letras do tesouro nacional). Most of these programs were not worth the paper upon which they were written. As every bond owner knows, navigating the processes required to complete an LTN transaction is very complex and difficult. Recurring events such as inconsistent guidelines from the Central Bank of Brazil (BCB), untimely downgrading of Brazil's government debt by credit-rating agencies, turmoil in the financial markets related to AML legislation and BASEL III banking requirements have created an environment that required LTN programs to undergo restructuring, often multiple times. And when this is combined with unprofessional behavior from uninformed or less than ethical "online brokers," life in the LTN arena has been challenging. 

We assist in

In 2016 our team narrowed its focus to 3 programs that we felt were truly credible and worthy of consideration. Even these programs have faced their share of painful program restructuring and delays. Even though none of those programs has performed yet, through these past difficult years MGCG experienced steady growth in our list of patient LTN bond owners--bond owners that we believe will soon be richly rewarded for their patience. In 2017 our focus was centered on just 2 LTN programs, programs that we have followed closely for over 3 years. We have strong faith in the principals behind both of these programs. 

In 2018, we announced our very high confidence in an LTN purchase program that uses a transaction process that has kept pace with the ever-changing and challenging issues associated with selling LTN bonds. This program is on the verge of demonstrating performance and we urge our bond owner clients to take note of it immediately and to carefully consider submitting some of their bonds to the queue that is just starting to develop.

In 2019, despite unexpected delays encountered since mid-2018 that have hindered this LTN program's purchasing activity, we maintain our very high confidence that this program will be the first (and perhaps only) LTN program to perform. This is the only program we know of that uses a transaction process that has kept pace with the ever-changing and challenging issues associated with selling LTN bonds. We expect program performance soon and we urge our bond owner clients to carefully consider submitting at least some of their bonds to the queue that has been steadily growing in length. We now have over 95 LTN packages officially submitted to this purchase program and we expect first purchases to occur in 2020.

If you have Series H, J, K, L, M, R or Z Series Letras do Tesouro Nacional (LTNs) that are repactuated and fully and legally registered with the Central Bank of Brazil, then the information below should be of interest to you--and you may want to consider having MGCG Services enter your bonds (or your client's bonds) into this program's queue. This LTN purchase program gives highest priority to bond portfolios that contain H-series bonds followed by M-series and R-series bond portfolios. Next priority is given to all other series bonds except Z-series bonds, which are prioritized last because of the fraudulent activity frequently associated with Z-series bonds.

Purchase Program available
 to bond owners who are able to present eligible bond portfolios, this LTN purchase program provides access to institutional LTN buyers willing to provide sale proceeds equal to approximately 18% of the LTN's future value (PU+),  At no up-front cost. This represents a price that will range from approximately  gross to the bond owner for an  $300M - $400M USD bond (depending on the maturity PU value of the bond and a BRL/USD exchange rate of .185), with correspondingly higher prices for higher value bonds. While this LTN purchase program has institutional buyers willing to buy any LTN bond series,  H-Series bond (depending on the maturity PU value of the bond and a BRL/USD exchange rate of .185), with correspondingly higher prices for higher value bonds. While this LTN purchase program has institutional buyers willing to buy any LTN bond series, 
the Program Manager reports greater initial demand for H-series and M-series bonds.   

Priority of our services

Recognizing that larger bond portfolios are frequently more attractive to Buyers, it should be noted that the priorities of this LTN purchase program are currently:
  • Priority #1: processing H-series (the highest demand bond series) and M-series  
  • Priority #2: processing bond portfolios containing: R-series, J-series, K-series, L-series bonds.  
  • Priority #3: processing Z-series bond portfolios. 

Criteria for receiving LTN program assistance from us:

    • MGCG will work with the consultant or the legal representative of the bond owner* for the purpose of receiving and processing required bond documents.
    • Direct access to the LTN owner must be available when required by the purchase program. 
    • The bond portfolio must contain:
    •           - CIS & PP from bond owner (full KYC documents are not required)
                - Bonds titled in the name of the CIS Applicant

                - STN bond documents actualized (updated) in 2017 - 2020
                - The most recent BCB or STN Transport Authorization  (even if bonds are outside Brazil)
                - The most recent GRU & Tax Receipts showing that taxes have been paid on the bonds
                - Corporate Resolution signed by the President and Signatory  (if the CIS is from a corporate entity) 
      • Other items that are helpful (if available) but not required are:‚Äč
                - STN black screen pages produced in 2017 - 2020 
                - Screen shots of the complete 21-page Euroclear file dated within the last 30 days. 
      • Upon receipt of all required bond documentation, MGCG will provide a Bond Package Summary & Genealogy document to obtain the information necessary to prepare a Profit Share Agreement (PSA) between MGCG and the Bond Owner. 
      • The final item required by MGCG prior to package submission to the LTN Purchase Program is the PSA, signed and notarized by the Bond Owner and MGCG. (The PSA will ensure that all eligible consultants will be compensated.)

      To receive LTN assistance from us: If your bond portfolio meets the criteria listed above, we invite you to submit general information about your bond portfolio using our online LTN Information Form. Upon an acceptable review of your LTN Information Form we will communicate back to you and arrange to send you a Program Overview of the LTN program mentioned above as well as other important documents needed to proceed.