UPDATE 2-JPMorgan banker sees Brazil firms borrowing for longer

Tue Oct 8, 2013 11:25am EDT

SAO PAULO Oct 8 (Reuters) - Brazilian companies will have a more diversified base of funding in coming years, with longer maturities and different structures, that will benefit firms with a focus on infrastructure and other capital-intensive activities, the head of JPMorgan Chase & Co's unit in the country said on Tuesday.

Fundraising patterns within a few years will be very different from now, with longer maturities making the chief difference, Jose Berenguer, JPMorgan's senior country officer in Brazil, said at an event sponsored by Brazil's banking lobby group Febraban.

An improved mix of funding should help companies with a focus on infrastructure investments, because money for those activities is needed for longer periods, the banker said. The country has the lowest investment ratio among Latin America's top economies despite being the region's largest recipient for direct investment and capital inflows.

Currently, a small part of the banking system's loan book goes to fund the construction of dams, ports and roads, with state development bank BNDES assuming a bigger part of that lending segment in Latin America's largest economy.

"I see a trend in which maturities, conditions will be different five or six years from now," Berenguer said at the event.

Brazil's government is pushing to create an attractive environment for infrastructure spending in an economy that has struggled over the past three years. The government expects $90 billion in annual investments through 2017 to help Brazil overcome soaring logistics costs and overheads for farmers and exporters.

Infrastructure development is a key focus for the Rousseff administration as Brazil prepares to host the 2014 World Cup and the 2016 Olympics. Usually, investment in infrastructure is seen as riskier than consumer lending because infrastructure investment tends to be less liquid, with funds parked for years.

U.S. SHUTDOWN

When asked by an attendee about the U.S. government shutdown, Berenguer said the political impasse between Republicans and Democrats could be negative for the global economy if it translates into a debt default. The impasse is probably going to be resolved at "the very last minute," Berenguer said.

If the U.S. defaulted, it would be for a very short time, he added. A consequence of that a debt rating downgrade among other things, he added.

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