CAF and BDMG Sign Agreement

Belo Horizonte, August 2013-As part of its expansionary strategies designed to support Brazil's productive mining sector,  mainly its micro and small enterprises, with long-term, low-interest financing, the Development Bank of Minas Gerais (BDMG), signed an agreement Thursday, Aug. 22 securing a USD100 million line of credit provided by CAF-Development Bank of Latin America. 

Funding will finance private-sector operations via lending structures carrying grace periods of up to two years. Projects approved for financing under the program will run for a maximum of 10 years. The Brazilian institution is already preparing to begin tapping the fund's capital later in 2013 and is also studying the feasibility of providing dollar-denominated financing arrangements for companies whose cash flows are denominated in the U.S. currency. 

According to BDMG President Matheus Cotta de Carvalho, the initiative strengthens the bank's position in global financial markets. "We have worked hard to diversify our capital structure to extend our lending capacity," said Carvalho Cotta. "Last year, we raised money through the issuance of financial credits in domestic financial markets and now, we're taking an important step to becoming a player in the international market," said Carvalho Cotta. "We will bring to Minas Gerais the most appropriate international resources to further stimulate BDMG's activities in the state by offering a broader range of lending options." 

BDMG currently participates in a global network of development banks that exchange strategies and alternative funding best practices with one another. Participating financial institutions include the Inter-American Development Bank (IDB), the Japan Bank for International Cooperation (JBIC), the International Bank for Reconstruction and Development (IBRD), the Financial Fund for the Cuenca del Plata Development (FONPLATA) as well as CAF-Development Bank of Latin America. 

CAF's Representative Director in Brazil Moira Paz-Estenssoro stressed that credits bound for BDMG will help renovate, expand and modernize productive capacities at companies established in the state via a local development institution. "CAF supports the consolidation of the region's financial systems with the objective of helping to ensure that the financial sector's institutions not only provide resources needed to cover their clients' operations but also promote financial competitiveness and sustainable business development," said Paz-Estenssoro. 

CAF plans to approve more than USD4.4 billion for the Latin American financial sector in 2013. Credit emissions for Brazil are estimated at USD1 billion.

National and Global Credit Ratings-The agreement with CAF was made possible thanks to BDMG's national and global credit ratings. In November 2012, Standard & Poor's assigned the bank a 'AAA' long-term national scale rating and a 'BBB-' long-term credit rating, with a stable outlook. 

Last December, Moody's Investors Service upgraded BDMG's long-term global local currency issuer rating to 'Baa3' from 'Ba1' and its short-term rating to 'Prime-3' from 'Not Prime.' The bank's long-term issuer ratings in the Brazilian national scale were raised to 'Aa1.br' from 'Aa2.br', with short-term ratings remaining unchanged at 'BR-1.' The outlook on these ratings is stable. 

This year, BDMG aims to achieve a record number of disbursements reaching the mark of R$2 billion in approvals.