State-owned Banco do Brasil made 62.5 percent of the nation’s farm loans last year, disbursing 108 billion reais, its fourth-quarter earnings report showed.
Government incentives and tighter regulatory capital restrictions are prodding banks to use securitization to finance the production of soy, sugar cane, rice and grains, according to Renato Buranello, a lawyer at Demarest & Advogados in Sao Paulo, which helped create the first public offering of securitized agriculture notes last year. The government passed a law in 2004 authorizing new debt instruments to finance agriculture and complement funding sources like Banco do Brasil and BNDES, the state development bank.
“The government doesn’t want to finance everything by itself anymore,” he said in a telephone interview. “Private credit is definitely going to increase.”