Brazil's government, federal district agree on BRB loan deal

About this update from Brb Banco De Brasilia Sa

Brazil's government and the Federal District have reached a deal for a loan to support struggling state-run lender BRB BMFBOVESPA:BSLI3, a court document showed on Thursday.Deal allows the Federal District to contract a loan of approximately 6 billion reais ($1.19 billion) from credit-guarantee fund FGC to support BRBGuarantees secured from a bank syndicate using the district's revenue flows from state and municipal participation funds as collateralLenders Bradesco BMFBOVESPA:BBDC3, Itau Unibanco BMFBOVESPA:ITUB3, BTG Pactual BMFBOVESPA:BPAC3, and state-run banks Caixa Economica Federal and Banco do Brasil BMFBOVESPA:BBAS11 part of the syndicate, sources saidNo federal guarantee will be providedBrazil's Treasury considers the Federal District lacking adequate payment capacity, preventing it from taking loans with federal backingAs part of the deal, the Federal District commits to adopting fiscal adjustment measuresBRB has been trying to address losses tied to allegedly fraudulent credit portfolios bought from Banco MasterBanco Master was liquidated by Brazil's central bank in November amid severe liquidity challenges($1 = 5.0421 reais)

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