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 BRB
Guarantees secured from a bank syndicate using the district's revenue flows from state and municipal participation funds as collateral
Lenders 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 said
No federal guarantee will be provided
Brazil's Treasury considers the Federal District lacking adequate payment capacity, preventing it from taking loans with federal backing
As part of the deal, the Federal District commits to adopting fiscal adjustment measures
BRB has been trying to address losses tied to allegedly fraudulent credit portfolios bought from Banco Master
Banco Master was liquidated by Brazil's central bank in November amid severe liquidity challenges
($1 = 5.0421 reais)