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Brazil to arrange $3.5 bln in bank loans for power sector -sources

By Leonardo Goy

BRASILIA, March 20 (Reuters) - The Brazilian government is helping arrange around 8 billion reais ($3.5 billion) in bank loans to an electricity industry clearinghouse to help bolster the finances of ailing power distributors, three sources with knowledge of the situation told Reuters on Thursday.

The government is currently in talks with state-controlled lenders Banco do Brasil SA and Caixa Econômica Federal SA, and private-sector lender Banco Bradesco SA for the loans, said the sources, who requested anonymity because the talks are under way. Spokespeople for Bradesco, Banco do Brasil and the government did not comment.

Caixa did not have an immediate comment on the deal.

The loan would go to the CCEE, a privately held entity in charge of buying and selling electricity in the spot market, which would subsequently funnel money into the coffers of Brazilian power distributors. Companies in the electricity sector are grappling with soaring spot power costs amid the driest start of a year in decades and the government's reluctance to hike consumer rates before the October presidential election.

The ideal structure for the transaction, two of the sources said, would be to borrow the money from a pool of banks and peg the loan to receivables linked to utility bills. Repayment could begin as early as next year, the sources said.

One of those sources said the peg to electricity bills would act as a guarantee for the loan, making the deal far more attractive for the banks.

Aside from the loan being negotiated, the National Treasury will lend an additional 4 billion reais to distributors, government officials said last week.

($1 = 2.33 Brazilian reais) (Writing by Guillermo Parra-Bernal; Editing by Leslie Adler)