Old Public Bonds

Below we present the reasons why some Brazilian public bonds that were issued in the past no longer have any financial value.

Old Domestic Debt Bonds

Until the second half of the 20th Century, the Brazilian Government routinely issued public bonds in various occasions to raise funding to promote the country's development (e.g. to reequip ports and railways, to increase the commodity's warehouse capacity, to build cold storage rooms, to increase electric power plants and to develop basic industries as well as the agricultural sector).

In 1957, aiming to increase its debt control and to provide a pattern to its debt instruments, the government exchanged all bonds issued between 1902 and 1955 for new securities. From 1957 onwards, therefore, the 5-year limitation period to claim the right to the bonds began and bond holders should have brought forward their securities for them to become redeemable. Hence, the bonds issued until 1955 that were not exchanged lost their value in 1962.

The Federal Government performed another public debt consolidation in 1967, issuing Decree-laws number 262, from 02/28/1967, and number 396, from 12/30/1968, which implemented the early redemption of domestic federal public debt bonds issued prior to that year, and authorized their exchange for new bonds until September 1969. In 1974, therefore, ended the 5-year limitation period (determined by paragraph 10, VI of article 178 from law number 3,071, from 01/01/1916) for the exchange of those bonds, which became no longer valid from that year onwards.

In summary:

• All bonds issued between 1902 and 1955 are no longer valid since 1962.

• Bonds listed in Decrees-Laws Nº 263/1967 and Nº 396/1968 are no longer valid since 1974.

Issuances of Bonds Denominated in French Francs – Brazil-France Agreement

During the 40´s and the 50´s, several Agreements were signed between the Brazilian and the French Governments and the French Securities´ Holders Association, related to the Brazilian bonds issued in that country. In this occasion, the Brazilian Government allocated USD 19,320,000 to form the Clearing Debt Fund related to those bonds. In turn, the French Government took responsibility for the Fund's management, including the distribution of the payments to the beneficiaries.

Although the period established in the agreements to perform the redemptions was meant to last two years, starting in 1946, it was postponed until 1951, when another bilateral agreement was signed in which the French Government transferred the Fund to the Brazilian Government. During this period, holders of these securities were called through public announcements to present themselves to appointed banks to redeem their bonds. The bonds not presented at the time lost their value and are no longer considered valid.

Paper-form bonds

There are no valid paper-form bonds issued by the National Treasury. Any offer of these type of bonds to individuals or companies consist in fraudulent transactions. More details available here.

 [inseir hyperlink para pagina frauds com titulos publicos].

National Treasury Bills – LTN issued in 1970

The National Treasury also reports that there has never been "purple", "green", "blue" or "diamond" National Treasury Bills – LTN bonds, with series "H, I, J, K... Z" or with any other attribute of color or letter, even if accompanied by documents and / or certificates supposedly signed by government officials from the National Treasury. The National Treasury does not and has never issued such documents. These so-called "securities" were also never "renegotiated", "restructured", "revalidated", "CETIPADOS" or "SELICADOS".  There are no valid paper-form LTN. All paper-form LTNs issued in the 1970s had a maximum term of 365 days and were redeemed at their respective maturities. The National Treasury warns that some individuals have tried to conduct fraudulent transactions by offering counterfeit LTNs, supposedly issued during the 70´s and with maturities longer than 365 days, which would have been allegedly rescheduled to 2036/2045 and so forth. They argue that those bonds are still valid and underwritten. All of this is false. Therefore, be aware of these documents and be wary of generous proposals with “promises of significant gains”, because it is an attempt of fraud.

The National Treasury highlights that regular issuances of LTN occur exclusively by:

• The Treasury Direct - Public bond retail sales program;

• Through weekly auctions.

Learn more

More information regarding Fraud with Brazilian Public Bonds [inserir hiperlink para a pagina de fraudes]

Examples of frequently used fake documents related to Brazilian bonds.

Booklet: Prevention of  Tax  Fraud with Brazilian Old  Government Bonds