BdB Accelerates Dollar Lending

Banco do Brasil (BdB) is making a concerted effort to step up long-dated dollar lending to domestic and non-Brazilian corporate clients. The move is rattling foreign banks active in Brazilian syndicated and bilateral lending. BdB and other Brazilian banks have nabbed sizable market share by offering local clients relatively cheap loans at attractive tenors. In 2009, BdB’s deployment of pre-export credit to companies surged 6x, albeit from a low base, to $3.1bn, according to Admilson Monteiro Garcia, head of the bank’s international division. That figure could jump above $5bn this year, he adds. “In the second half of last year, there were 6 pre-export loans done in Brazil and we participated in all of them,” adds the banker. The strategy of offering clients dollar loans – which also include shorter dated export credits called ACCs and ACEs – marks a significant departure for BdB, which has historically focused exclusively on BRL-denominated loans. Total dollar lending at BdB grew marginally in 2009 to $14.0bn, up from $13.5bn in 2008, though longer dated pre-exports accounted for a larger portion of the pie in 2009 than the previous year. Among deals BdB has participated in recently are Fibria, Cosan and Odebrecht’s twin platforms. For iron ore miner Samarco, the bank swallowed whole a $300m 5-year trade credit line late last year. This torpedoed competitive bids from foreign banks eager to lend to the high quality credit. Monteiro tells LatinFinance that the credit crunch actually boosted the state-owned bank’s liquidity position as global lenders and corporate depositors migrated to quality institutions, such as BdB. “This extra liquidity came to us at a time when we wanted to create anti-cyclical movement [to lend in Brazil,]” he says. The banker notes corporate dollar lending from international banks was drying up and companies were in need of dollar lines. “This [growth in lending by BdB] won’t stop in 2010,” says Monteiro, who claims his bank’s share of the do