August 31, 2017 / 6:49 PM / a year ago

Brazil law to ease access to secured credit for corporate borrowers - Valor

SAO PAULO, Aug 31 (Reuters) - A new law allowing Brazilian companies to electronically register receivables and other guarantees as collateral could accelerate corporate loan disbursements and cut interest rates in the segment, Valor Econômico newspaper reported on Thursday.

The supply of available credit for Brazilian companies could rise by as much as 480 billion reais ($153 billion) with the new system, Valor said, citing Cerc, a privately owned receivables registration company. The stock of available receivables and assets that could be used for guarantees is 1.9 trillion reais, Valor said.

The law, which was signed by President Michel Temer on Wednesday, will pave the way for the creation of “duplicata digital,” a mechanism by which collateral for commercial notes does not have to be registered by a notary.

The new law should also lead to the creation of companies that would register those guarantees electronically, Valor said. An integrated registration system for those assets should reduce significantly the risk of fraud on those transactions, which has been commonplace in Brazil for years, the newspaper added.

“The measure has the potential to enhance the flow and quality of credit markets,” Otávio Damaso, a central bank director in charge of oversight, told Valor.

The move underscores efforts by policymakers to tackle chronic credit shortages by simplifying loan origination processes. Such moves include replacing a business-friendly interest-rate peg for state development bank BNDES loans with another that reflects market borrowing costs more closely.

The central bank did not have an immediate comment on the Valor report.

$1 = 3.1460 reais Reporting by Guillermo Parra-Bernal; Editing by Cynthia Osterman

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