Banking and FInance - updated on Mar 24 at 12:26 am
THE NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT BANK (BNDES) RELEASES MEASURES TO FACE THE CRISIS CAUSED BY CORONAVIRUS
BNDES released the first measures against the economic crisis that is taking place in the country due to the coronavirus pandemic by allocating R$55 billion to all companies that are currently active in its credit portfolio.
Out of those R$55 billion, R$20 billion will be transferred to the Employees' Severance Indemnity Fund (FGTS), which will then allocate these resources to the Social Integration Program and to the Public Servants' Fund Financing Program (PIS/PASEP). Thus, allowing employees to withdrawal these resources according to the rules that will be established by the Ministry of Economy.
Companies that are in good standing with their obligations before the Bank may benefit from a six-month extension for the payment of interest and principal. At the end, the suspended amounts will be incorporated into the total debt and refinanced.
For those companies that obtained their credit lines directly with BNDES may, as of March 24, resort to the Bank’s virtual agency to request the suspension of the payment. On the other hand, those companies that obtained their credit through on-lending should seek the financial agents to request the suspension of the payment as March 24 as well.
BNDES allocated R$30 billion for term extension measures known as standstill.
The last measure released will be destined to the small and medium sized companies in an amount of R$5 billion. Those that fall under this classification may seek the financial agents accredited by the Bank to apply for this credit line. Its main conditions are: (i) a payment period of five (5) years; (ii) a grace period of twenty-four (24) months; and (iii) the lack of specification of the allocation of the resources. Measures to facilitate the access to credit lines will be constantly revised. For example, today it is no longer necessary to present a Debt Clearance Certificate (CND), which until then, was an essential requirement in order to obtain a credit line by the Bank.
All measures released will be effective as of March 23rd, 2020 and will be updated as BNDES discloses new measures.
BNDES also explained at its press conference that the aviation, tourism, bars and restaurant industries will be awarded specific measures in the coming days, as will the states and municipalities.
Specifically regarding the aviation industry, BNDES understands that, given the industry’s relevance to the Brazilian economy, the measures under study will take into consideration four (4) essential pillars: complete allocation to the whole industry; impossibility of allocating resources for the payment of any type of private creditor; the resources can only be used to stimulate the Brazilian air network; and should aim at the profitability of the industry.
Lastly, BNDES clarified that the measures will last as long as necessary to help the country and the companies to go through the crisis. Since the Bank has sufficient liquidity, it is also studying the creation of guarantee funds and additional means to grant guarantees directly, as, in its view, the credit market is averse to risk taking, which may aggravate the crisis.