* Gov't eases BNDES loan exposure limits to miner Vale
* Extends no-limits policy to Petrobras, Eletrobras
* Move comes as credit conditions abroad worsen
By Tiago Pariz and Luciana Otoni
BRASILIA, May 24 Brazil eased rules for
subsidized lending by state development bank BNDES to three of
the country's biggest companies, in a move that may help
President Dilma Rousseff shield a struggling economy from market
The National Monetary Council, which sets the country's
guidelines for credit, monetary and exchange policies, late on
Thursday allowed BNDES to increase loans to iron-ore miner Vale
above a limit of 25 percent of the lender's loan
The council also extended the no-limit loan policy for
Brazilian state-led oil giant Petrobras and
state-controlled power company Eletrobras until June
2015. The measure was due to expire later this year.
The credit move comes at a time when uncertainty over the
health of the global economy has increased the cost of credit
for some corporate borrowers.
"Given the BNDES role as a development bank and the
strategic importance of these companies ... the council decided
to allow BNDES to surpass the credit limit for a longer period
of time for Petrobras and Eletrobras and include Vale," Sergio
Odilon dos Anjos, the central bank's head of regulation, said in
Rousseff has moved with a barrage of fiscal and monetary
stimulus to support an economy that has flirted with recession
since mid-2011. Earlier this week she announced a new round of
tax breaks to bolster the automobile industry in the world's
sixth largest economy.
A credit crunch related to a potential Greek debt default
and euro exit could spoil her plans to revive the economy. A
slowing Chinese economy is also threatening the price of key
Brazilian exports like iron ore, oil and other commodities
needed to pay corporate debts.
The BNDES, the hemisphere's largest development
bank, had a key role in providing Brazilian companies with ample
credit during the 2008-2009 global financial crisis.
Tight lending conditions have forced Vale to review
projects. The company decided to sell some non-iron assets like
coal and oil projects in Colombia and Brazil.
The no-limit loan policy could help Petrobras develop some
of the world's biggest oil reserves off the shores of Brazil.
The South American country may surpass the United States to
become the world's No. 3 oil producer with expected output of
more than 8 million barrels per day by 2020, according to
production estimates of Petrobras and other private oil firms
operating in Brazil.
State-controlled Petrobras and Eletrobras, and Vale, the
country's biggest export earner, jointly have plans to invest
about $300 billion over the next five years.
The Rousseff administration considers these companies
essential to the health of the domestic economy.
The three companies make up about 25 percent of Brazil's
benchmark Bovespa stock index. Petrobras and Vale are the two
largest non-US companies on the New York Stock Exchange.
A sharp depreciation of the real, partly caused by
government efforts to protect exporters, has also increased the
costs of taking loans in dollars for local companies. The real
has weakened 8 percent so far this year.