Brazil to let state cos refinance debt locally
Reuters, Thursday, November 05, 1998 at 12:24
BRASILIA, Nov 5 (Reuters) - Brazil's National Monetary
Council (CMN) said Thursday it will allow state companies to
trade up to 80 percent of their foreign debt for new internal
debt issues, despite the loss it could mean to reserves.
State companies, which have faced difficulties rolling over
their foreign debt at soaring interest rates, can issue new
debt within Brazil and use the funds to pay off bonds as they
come due overseas, said Paolo Zaghen, a Central Bank director.
"If (the company) isn't able to refinance the debt outside
of Brazil, it can do a deal worth up to 80 percent of the debt
internally and liquidate it outside," Zaghen said after a
meeting of the CMN, which is the highest monetary policy making
body in Brazil.
The exchange of debt would mean pulling more money out of
Brazil, which could put a strain on reserves, but it will ease
financing costs for the state-owned companies. The remaining 20
percent of foreign debt will have to be rolled over on external
markets or paid off.
During its meeting, the CMN also authorized Brazil's Banco
Frances Uruguay, which is controlled by an Argentine unit of
Spain's Banco Bilbao Vizcaya (MADRID:BBV), to operate as a national
bank in Brazil, completing the first step toward expanding
operations in the country.
Copyright 1998, Reuters News Service |
