Reuters: Bankruptcy News: Brazil's BNDES may lose $222 million if EBX defaults, Folha says

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Brazil's BNDES may lose $222 million if EBX defaults, Folha says Jul 12th 2013, 12:06 Fri Jul 12, 2013 8:06am EDT * Lack of guarantees affects 25 pct of EBX loans at BNDES * Assessing EBX-linked risks is harder for state lenders * BNDES, EBX had no immediate comment on the Folha report SAO PAULO, July 12 (Reuters) - Brazilian state development bank BNDES may lose up to 500 million reais ($222 million) in the event of a default by billionaire Eike Batista's Grupo EBX energy and mining conglomerate, newspaper Folha de S. Paulo reported on Friday. According to Folha, which did not say how it obtained the information, BNDES disbursed 2 billion reais to EBX. Of that, 75 percent, or 1.5 billion reais, was backed by assets and other guarantees, implying that losses in a default could reach a maximum 500 million reais, Folha added. Government officials are already working with that number if the worst-case scenario for EBX materializes, Folha said. With a growing imbalance between assets and liabilities, dwindling cash and limited fundraising options, bond and stockholders are stepping up bets that Batista may have to restructure the debt of some EBX units. A spokesman for BNDES in Rio de Janeiro was not available to comment on the Folha story. EBX had no immediate comment. The Rio de Janeiro-based bank, which is considered the nation's largest source of long-term loans for companies, committed as much as 10.4 billion reais in credit to EBX, but has only disbursed a portion of it, a spokeswoman told Reuters last month. Folha said the 2 billion reais number excluded loans made by the BNDES to power producer MPX Energia SA. E.ON SE , Germany's biggest utility, took control of MPX earlier this year. A government push to finance homegrown conglomerates with taxpayer money allowed Caixa Econômica Federal SA and BNDES to lend twice as much to EBX than any other private-sector rival, estimates by several analysts show. But assessing risks is harder in the case of state banks, whose assets soared after President Dilma Rousseff and predecessor Luiz Inácio Lula da Silva instructed them to foster economic growth by broadening access to credit even at the expense of profits. About $180 billion of taxpayer money has been pumped into Banco do Brasil SA, BNDES and Caixa since early 2009 to support such expansion. Link this Share this Digg this Email Reprints

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