In another round of updates, we have selected below the main economic measures launched in the last month by different financial markets agents to address the economic impacts resulting from Covid-19, as well as other matters of interest to the financial markets:
Brazilian Development Bank (BNDES)
Financing Line for the Healthcare Sector (Emergency Direct Credit)
On 06.08.2020, BNDES approved the creation of a financing line of up to R$ 2 billion to support the healthcare sector’s working capital needs. We highlight the following main features of the financing line:
Financing Line for the Sugar and Alcohol Sector (Support Program for the Sugar and Alcohol Sector – PAAS)
On 05.04.2020, BNDES approved the creation of a financing line of up to R$ 3 billion to guarantee the storage of ethanol in sugar and alcohol plants in Brazil, which will be also supported by other financial institutions. We highlight the following main features of the financing line:
Large Companies Supply Chain Financing Line (Supply Chain Credit)
On 05.04.2020, BNDES approved the creation of a financing line of up to R$ 2 billion to finance the supply chain of large companies, which will work as the operation’s “anchors”. We highlight the following main features of the financing line:
Federal Government
Provisional Measure (PM) No. 975 of 06.01.2020
It created the Emergency Credit Access Program (Emergency Program) that aims at facilitating the access of credit through the provision of guarantees, having the following main features.
The MP No. 975 also changed the limit of the guarantee to be provided by the Operations Guarantee Fund (FGO) for financial institutions participating in National Support Program for Micro and Small Business (Pronampe), being possible to guarantee 100% of the amount of each transaction, being limited to up to 85% of the financial agent’s portfolio.
Federal Government
Law No. 13,999 of 05.18.2020
Institutes the National Support Program for Micro and Small Businesses (Pronampe), creating a line of credit of up to R$ 15,9 billion to micro and small businesses.
The line of credit has the following main features:
Private financial institutions that are authorized to operate by the Central Bank may grant this line of credit, including fintechs and payment institutions, the financing being partially guaranteed by the Operations Guarantee Fund (FGO).
Judicial Decision of the Federal Supreme Court (Supremo Tribunal Federal – STF)
By means of an appeal presented by WSul Gestão Tributária Ltda. and Cooperativa Vinícola Aurora Ltda., against the judicial decision of the Court of Appeals of the Rio Grande do Sul State, STF ruled, by means of general repercussion, that:
Hence, the payment of assigned subsistence-related credit still has precedence over common writ of payments (precatórios).
According to the Federal Supreme Court Justice Marco Aurélio, the revision of the writ of payments (precatórios) nature would harm creditors because “considering market conditions, if the credit loses its own quality that allows its preferential payment, there will be a loss of interest in its acquisition or, at least, a decrease in its value”.
Central Bank of Brazil (Banco Central – BACEN) and National Monetary Council (Conselho Monetário Nacional – CMN)
CMN Resolution No. 4,822 of 06.01.2020
Regulates the creation, organization and operation of joint guarantee companies (SGS) and counter guarantee companies (SC).
The SGS is a company created with the purpose of providing guarantee for its participating shareholders who contract credit transactions, in order to facilitate access to credit. The SC, on the other hand, is a company created to offer counter guarantee to the SGS.
We highlight the following main features of the regulation:
Mutual Guarantee Companies (SGS)
Counter Guarantee Companies (SC)
CMN Resolution No. 4,820 of 05.29.2020
Supplemented the prohibitions and restrictions, established by the CMN Resolution No. 4,797, of 04.06.2020, for financial institutions in order to maintain the credit supply during the COVID-19 pandemic, with the main following features:
BACEN Resolution No. 4,819 of 05.29.2020
Purpose: It aims at speeding up the release of funds by financial institutions and at facilitating access to real estate credit, through the temporary flexibilization of rules related to the release of funds in connection with real estate financing; and
Requirements: For the real estate financing entered into up to 09.30.2020, the financial institutions may release the funds after the filing (prenotation) of the guarantee with the competent Real Estate Registry, without the requirement of its effective registration.