3 de noviembre de 2015 / 17:48 / en 2 años

Fitch: Brazil Ending 'Pedaladas' a Governance Positive

(The following statement was released by the rating agency) RIO DE JANEIRO, November 03 (Fitch) Brazil's decision to repay National Treasury debt owed to federally owned banks is positive for the banks as it imposes a new level of segregation between the government and these financial institutions, says Fitch Ratings. The decision will have a small effect on the banks' liquidity but prevents them from accumulating high amounts of Treasury receivables on their balance sheets. If the payment is approved, the liquidity of Brazil's largest federal government-owned banks, Banco do Brasil's (BdB) and Caixa Economica Federal's (Caixa) may benefit from the move sooner than Banco Nacional de Desenvolvimento Economico e Social (BNDES). BNDES may account for the return of the receivables by netting its liabilities due to the Treasury. The Federal Accounts Court's (TCU - Tribunal de Contas da Uniao) rejection of the 2014 national accounts earlier last month triggered the government's decision. TCU considered the accumulation of Treasury debt at BNDES, BdB and Caixa -- a practice known locally as "pedaladas" -- a violation of fiscal responsibility law (Complementary Law 101). All three banks' receivables from the Treasury grew significantly since 2011. BNDES has the largest outstanding balance, most of which is related to the government's flagship subsidy program to support investment in the Programa de Sustentacao do Investimento (PSI). BNDES has been the main financial agent for the program since its launch in 2009. At June 2015, BNDES's receivables from the Treasury totaled BRL27 billion, of which BRL24.5 billion was related to PSI. At December 2011, it totaled BRL8 billion. The increase in two other state-owned banks' receivables was similar, although the outstanding amounts were lower. The bulk of BdB's receivables from the Treasury are related to the government's subsidized agricultural lending programs. At June 2015, BdB's total receivables from the federal government, including the Treasury, stood at BRL18 billion, up from BRL1 billion at December 2011. At Caixa, the receivables are mainly related to the Minha Casa Minha Vida social program. At June 2015, Caixa's total receivables stood at BRL5 billion, up from BRL1.5 billion at December 2011. The government decided to pay its obligations with funds that became available following the National Monetary Council's (Conselho Monetario Nacional) recent reduction of the 2015 budget for PSI to BRL19.5 billion. The budget for 2015 was originally slated at BRL50 billion in December 2014. The ratings of BNDES, Caixa and BdB are based on sovereign support and are equal to Brazil's sovereign ratings. Their ratings would be affected by potential changes in the sovereign ratings or the federal government's willingness to provide support. Contacts: Esin Celasun Director Latin American Financial Institutions +55 21 4503 2626 Rio de Janeiro, Brazil Claudio Gallina Senior Director Latin American Financial Institutions + 55 11 4504 2216 Sao Paulo, Brazil Matthew Noll, CFA Senior Director Financial Institutions Fitch Wire + 1 212 908-0652 33 Whitehall Street New York, NY Media Relations: Alyssa Castelli, New York, Tel: +1 (212) 908 0540, Email: alyssa.castelli@fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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