BNDES sets a new benchmark

Sep 21, 2017

Brazil's national development bank will move from a subsidized long-term lending rate to a new rate based on the government's borrowing costs, but will short-term pain translate into long-term gain?

Thierry Ogier

Keywords: loans development banks interest rates TJLP TLP BNDES Brazil

After years of doling out cheap cash, Brazil’s national development bank BNDES is taking a new path. The state-owned lender is hoping to move away from benchmarking its loans against a discounted interest rate and instead use government borrowing costs as a reference point.

The move is part of a push for BNDES to shrink its role in Brazil’s economy. The approach is intended to pave the way for commercial banks eager to lend at competitive rates. It may seem a logical pivot, but changing the benchmark has provoked fierce opposition.

"Those who...

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