Brazil's BNDES seen providing less funding
Brazilian development bank BNDES could end up with less capacity to lend after a pre-payment to the national treasury.
BNDES, which receives treasury funding to provide subsidized long-term loans, was ordered recently by President Michel Temer to pre-pay 180bn reais (US$57.7bn) to the treasury. The decision was motivated by the government's struggle to improve the country's fiscal situation.
According to Fitch Ratings, the pre-payment will likely undermine BNDES' ability to provide loans in 2018 but it will be neutral for the ratings of the bank.
Looking forward, BNDES' large market share of long-term loans will gradually decline as low-cost funding from the treasury falls, said the ratings agency.
However, as the Brazilian economy recovers, BNDES may find alternative ways to continue playing an important development role in Brazil, Fitch added.
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