Companies headquartered in Brazil with subsidiaries abroad, such as Companhia Vale do Rio Doce and Petrobras, or Brazilian subsidiaries of firms whose head office is outside the country, like Volkswagen and Caterpillar, can now obtain interest rate ‘equalisation’ from Banco do Brasil’s Programa de Financiamentos Exportaes – Proex.
For 2007, the Proex budget amounts to R2.2bn (US$1.1bn), of which R1.3bn is slated for financing and R950mn for interest rate equalisation. The equalisation modality allows an exporter to have part of export-related interest rate payments bore by Banco do Brasil.
These multinational companies cannot borrow Proex financing because their revenues exceed the R60mn limit. The exporters can search for funding in financial markets, and only charge the importer a cost of Libor flat. The actual pricing difference is paid by Banco do Brasil.
“This is important to Brazil because inter-company transactions have a very significant participation in Brazil’s trade flow,” says Nilo Jos Panazzolo, director of the foreign trade area at Banco do Brasil. “The country is very much interested in expanding its exporters and buyers portfolio. The bigger external markets are, the less vulnerable Brazil is.”