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06.18.08
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BNDES discusses long-term credit and increased investments in the week of its 56th anniversary
President Luciano Coutinho attended, on Tuesday, 17, the seminar “Financiamento de Longo Prazo e Bancos de Desenvolvimento” (Long-term Financing and Development Banks) with the former minister Delfim Netto; the former President Armínio Fraga; and the former Chief Officer of IEDI, Julio Gomes de Almeida, in BNDES convention room, in Rio de Janeiro. The event is part of BNDES 56th anniversary week.
During his presentation, Coutinho said he believes that while market interest rates do not match the Long-Term Interest Rate (TJLP), the demand for loans in BNDES will remain strong.
Vis-a-vis the relative shortage of funds from FAT/TJLP), BNDES has been adopting a selective policy of funding and increasing the marginal cost of credits granted by the Bank. “We are making our best efforts to provide clear priorities within the three most important goals that correspond to an essential mission of the Bank: buildup of new industrial capacities and new infrastructure, especially in terms of energy; and innovation, which is essential to increase productivity and cut down on costs”, Luciano Coutinho said.
The projects not listed in the three priorities will be served with increasing credit installments in currency basket or IPCA (Extended Consumer Price Index), forming a diversified portfolio.
BNDES’ President also stated that the current increasing trend of Selic rate (which controls market interest rates) may delay the convergence process of long-term interest rates with TJLP. In that matter, a considerable challenge must be tackled not to place the country’s investment cycle at risk.
“This process makes us think that we should pursue a more inventive agenda to encourage the capital market, through Credit Right Funds (Fdics) and securitization mechanisms to help fill gaps. Similarly, public banks must make an additional effort to get more funds while the interest rates do not drop”, BNDES President said.
Even so, Coutinho expects declines in bank spreads due to strong competition in the banking system for credit.
Higher investments – In the same seminar, BNDES Economic Research superintendent (APE), Ernani Torres, stated that investments in Brazilian economy has been growing dramatically since 2005. For over 12 quarters in a row, the growing speed has been higher than the GDP and the APE’s survey estimates point out a 11.8% p.a. growth for investments between 2008 and 2011.
APE’s team perspectives for investments were based on 70% of investments to be made in industry and infrastructure in the period analyzed. The result delivered shows a 10.7% boost in investments in housing construction, 13.2% in infrastructure and 12.4% in the industry, between 2008 and 2011.
“The ongoing investment process will put pressure on a strong demand for long-term funding”, Torres said. Therefore, along with investment increase forecasts, Torres showed a panel of the current credit market in Brazil. Summing up, investments in the industry and infrastructure are still made through long-term financing based on self-financing of companies and funds of BNDES.
In the private sector, Brazilian companies three-folded their self-financing between 2004 and 2007. “Our companies now are more capitalized and prepared to get market opportunities”, Torres said.
In the same period, primary issues of stocks increased by eight-fold and total issues, including the secondary ones, reached, in 2007 alone, R$ 67.3 billion, much higher than R$ 27 billion of 2006.
The debenture market has also burgeoned in recent years. However, in spite of the massive development, Torres said that tight constraints are still in place, once most of them refer to operations made by leasing companies.
Out of R$ 32 bi of debentures issued from January to May 2008, R$ 31 bi come leasing operations. Apart from such operations, the number of issuers was only 35 in 2007.
In his analysis, Ernani showed that the stocks market still depends on external investors and keeps on focused on some sectors, although it has contributed to broaden the capital base of companies.
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