• Categories
  • Archives

Brazil to the Rescue of Meatpacking Sector with US$ 5 Billion

Sadia from Brazil Brazil will offer a ten billion reais credit line from BNDES, the National Development Bank to support activities in agribusiness, Brazilian Finance Minister Guido Mantega announced. He added the funds would go mostly to support Brazil's ailing meatpacking sector and would be offered at an annual interest rate of 11.25%.

The measure, the latest of a series of Brazilian government initiatives to boost local credit circulation, was approved Thursday in an extraordinary meeting of the National Monetary Council.

Brazil's meatpacking industry has been particularly hard hit by falling demand during a slowdown of the global economy. This includes JBS SA, the world's largest beef producer and Sadia SA, the country second-biggest food company.

The decision to pump US$ 4.7 billion in the industry helped to rise share prices of most meatpackers particularly JBS, Marfrig e Comércio de Alimentos SA and Minerva SA, the three leading companies in the industry.

With the credit line "the government aims to avoid further deterioration in the production chain, which has been under pressure" due to weak global demand, high debt levels and costlier credit, Credit Suisse AG analyst Marcel Morares wrote in a press column.

The credit line will likely provide the most benefit to the most indebted companies such as Sadia, Banco Bradesco SA analyst Fábio Monteiro pointed out in a note. Sadia apparently is in talks to sell assets or be taken over after reporting a fourth-quarter loss of 2.04 billion reais (US$ 930 million) on wrong-way bets on the Brazilian currency.

Sadia, which is a popular brand, lost nearly one billion reais (US$ 456 million) in short dollar futures positions starting in mid-September. The losses have put Sadia in a bind, leading Credit Suisse to say that the financial aid "might only provide short-term relief."

"It definitely does not solve the company's urgent need of a capital injection in order to balance its extremely leveraged balance sheet," pointed out the Credit Suisse report. Sadia stock is listed on both the Bovespa stock exchange and in New York.

Mercopress

Tags:

  • Show Comments (1)

  • ch.c.

    Stupid question ….
    …what is the Brazilian industrial sector NOT helped and/or subsidized by your government ??????

    Has Robbing Hook not said time and again that developed nations AGRICULTURE subsidies are UNFAIR ???????

    Hey…hey !

    Never ever trust a Brazilian remains a golden rule !!!!!!!

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Preparing Jordan King’s Business Mission to Brazil

Jordan King Abdullah II's visit to Brazil in October should encourage bilateral trade between ...

Aquila’s Spell

To believe in the mathematic that drew them apart, she working the whole day, ...

Rio Answers to 11% of All Brazilian Exports. US Is Main Destination

Exports from the state of Rio de Janeiro grew 31.5% in the first half ...

Mercosur Summit Without Chavez Is All Talk and no Teeth

Mercosur presidential summit in Paraguay approved Friday, June 29, steps to speed cross-border shipments ...

Brazilian Indian Becomes a Doctor in Havana. She’s First One to Do So

Maria da Glória Oliveira da Silva, of the Pataxó Hã-Hã-Hãe people, has just graduated ...

Brazil Chalenging US Leadership and Raring to Be New IDB Boss

After 17 years at the helm of Latin America’s largest source of development financing, ...

Buying Fever by Brazilians Abroad Is Offset by Foreign Direct Investment

Brazil posted a record-high current account deficit in 2011 on rising profit remittances by ...