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

SAO PAULO, Oct 8 (Reuters) - Brazil's state development bank BNDES has no plans for a "massive" sale of its equity stakes in companies, as reported by local media on Tuesday, adding that it is gradually scaling down its need for National Treasury money to fund new lending.

The bank, wholly owned by Brazil's federal government, has received no guidance from its controlling shareholder to dispose of assets massively, according to a statement released on Tuesday.

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

Commenting on the report, the bank said that "it has not contemplated the massive sale of its portfolio of equity holdings and has not received any guidance from the Finance Ministry in this respect."

BNDES is the main source of long-term corporate financing in Brazil. The bank, through its investment unit BNDESPar, held 87.9 billion reais (about $40 billion) in stocks of some of Brazil's largest companies as of June 30.

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

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

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

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

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

The government, Valor said, is concerned that four years of heavy public capital injections into state-run lenders might fan a surge in public debt that force credit rating agencies cut the nation's debt ratings.

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

BNDES' loans outstanding has more than quadrupled since 2005. [ID:nL1N0HR1XV}.

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

The finance ministry declined to comment on the Valor report.