Brazil Central Bk: No Forex Loans From Reserves Disbursed

Brazil Central Bk: No Forex Loans From Reserves Disbursed

BRASILIA (Dow Jones)--Brazil's central bank hasn't yet disbursed foreign-currency loans from international reserves under a direct lending program announced earlier this month due to borrower delays in processing paperwork for the operations, the bank said Friday.

The monetary authority said a total of seven banks so far have sought information about obtaining the credit lines for clients, though none have completed the application process for the program.

The central bank earlier this month said it was prepared to offer as much as $36 billion in foreign-exchange credit for banks to help local companies roll over their debts abroad during a period of reduced credit availability.

Funds were initially scheduled to be made available beginning Friday, but central-bank officials said that no loans had been processed so far due to the "complexity of the operations," which are based on specific requests from potential borrowers.

The central bank initially estimated demand for the loans of at least $20 billion.

Under the program, participating local banks can obtain the foreign-exchange credit from the central bank at a cost of the London interbank offered rate plus 1.5% and are free to pass the credit on to clients at rates of their own determination. The loans can cover as much as 100% of borrowers' debt obligations, but must be repaid in full within a period of one year.

The monetary authority said the next scheduled dates for disbursement of such loans will come on March 13 and March 27.

Since a deepening of a global credit crisis in September, Brazil's central bank has taken a series of actions to boost dollar liquidity locally, including selling dollars directly in spot market and repurchase auctions and offering credit directly from reserves.

As of Friday, Brazil's reserves stood at $199.34 billion.

   -By Gerald Jeffris, Dow Jones Newswires; (5561) 3335-0832, [email protected]  

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(END) Dow Jones Newswires

February 27, 2009 16:41 ET (21:41 GMT)

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