Brazilian federal savings bank Caixa Econômica Federal (CEF) will issue about 50mn reais (US$27.7mn) in “Letras Financeiras” (LF), a debt instrument with a minimum term of two years, as the bank test the waters for future issues, finance VP Márcio Percival told BNamericas.

The bank hopes to be the first to issue the LFs, with an issue date in May, a spokesperson for the bank confirmed. In February, the bank said it planned on hitting markets sometime this year.

“Our initial worry is to see how the liquidity is on this financial product, since the market doesn’t know it yet,” Percival said, noting that there obviously aren’t secondary markets for LFs yet, but that they should come. He expects investors to want 2-4 year tenors.

Central bank BCB only issued rules allowing the LFs in February, but many banks see them as a way to increase their longer-term funding options.

CEF’s loan book reached 124bn reais at end-December, up 55.3% from 12 months before, and total assets came to 342bn reais for 15.5% growth. CEF wants about 28% growth on its loan portfolio in 2010.

“It’s very important that the Brazilian economy develop long-term credit and debt options, beyond what exists today,” Percival said.

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