Bloomberg News

Brazil Discouraging Securitization of State Loans, Lopes Says

April 17, 2013

Credit Suisse Group AG (CSGN)’s pending $1 billion federally-guaranteed loan to the Brazilian state of Mato Grosso probably will come with restrictions on the bank’s ability to repackage it into securities, a state official said.

That’s because the federal government, which must approve the loan, doesn’t want such securities to compete in the market with its own bonds or those of state-owned companies, according to Mato Grosso’s deputy finance secretary, Vivaldo Lopes.

While terms of the loan may not include an outright ban on securitization, they probably will make it more difficult, Lopes said yesterday in an interview at the LatinFinance Issuers and Investors Forum in Sao Paulo.

Mato Grosso, in western Brazil, has said it plans to use some of the loan proceeds to refinance principal still owed to the federal government after a bailout in 1997.

Earlier this month, Credit Suisse and JPMorgan Chase & Co. (JPM:US) sold notes backed by a $1.27 billion federally guaranteed loan the Zurich-based bank had made to the state of Minas Gerais.

Because of the guarantee, the securities offer investors the backing of the Brazilian government with yields higher than those on sovereign bonds.

An official for Credit Suisse in Sao Paulo, who asked not to be identified in accordance with company policy, declined to comment. A Treasury official also declined to comment.

To contact the reporter on this story: Gabrielle Coppola in Sao Paulo at gcoppola@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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