Brazil's BNDES says no plans for 'massive' sale of equity stakes

Reuters

SAO PAULO, Oct 8 (Reuters) - Brazil's state development bankBNDES has no plans for a "massive" sale of its equity stakes incompanies, as reported by local media on Tuesday, adding that itis gradually scaling down its need for National Treasury moneyto fund new lending.

The bank, wholly owned by Brazil's federal government, hasreceived no guidance from its controlling shareholder to disposeof assets massively, according to a statement released onTuesday.

The statement came as a response to a Valor Econômicoreport saying the asset sales could alleviate pressure on thegovernment to pump fresh capital into the lender.

Commenting on the report, the bank said that "it has notcontemplated the massive sale of its portfolio of equityholdings and has not received any guidance from the FinanceMinistry in this respect."

BNDES is the main source of long-term corporate financingin Brazil. The bank, through its investment unit BNDESPar, held87.9 billion reais (about $40 billion) in stocks of some ofBrazil's largest companies as of June 30.

In its statement, the bank did not categorically rule outsales of parts of its investment holdings.

"As it frequently does, the bank will continue to rotateits investment portfolio, seeking to enhance profitability,embracing the best management practices and avoiding triggeringpressures that could destabilize markets," it added.

A massive sale could drag down local equities, already amongthe world's worst performers this year. The benchmark Bovespastock index shed 14 percent this year.

Valor said the government had not decided yet on the sizeand timing of BNDESPar's asset sale, though it could happen byyear-end to allow the National Treasury to reduce a potentialcapital injection into the bank to less than 20 billion reais.

The bank has been working towards reducing its need forTreasury funds, and may look to do so more aggressively incoming months, Valor reported citing unnamed sources.

The government, Valor said, is concerned that four years ofheavy public capital injections into state-run lenders might fana surge in public debt that force credit rating agencies cut thenation's debt ratings.

Moody's Investors Service last Wednesday lowered itsoutlook on Brazil's sovereign debt rating to "stable" from"positive," following a Standard & Poor's decision in June tolower the outlook on Brazil's rating from "stable" to"negative."

BNDES' loans outstanding has more than quadrupled since2005. [ID:nL1N0HR1XV}.

In August, the bank's president, Luciano Coutinho, said thatBNDES needed more capital to fund a projected surge of 22percent in loan disbursements to as much as 190 billion reais.BNDES has received about 300 billion reais in fresh capital fromthe National Treasury since 2009, pushing up Brazil's publicdebt.

The finance ministry declined to comment on the Valorreport.

View Comments