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

    Sadia from Brazil

    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

    Bird Flu Forces Brazil do Cut 25% of Its Chicken Production

    As a result of the bird flu outbreak abroad, most of all in Europe, ...

    Silvana Bianchi and Sean Goldman

    Grandma Silvana Urges Lula to Let Sean Talk and Calls Goldman’s Move Unfortunate

    Sean Goldman’s grandmother, Silvana Bianchi, in another interview with the Brazilian press, said she ...

    Brazil Uses Central America as Springboard to US

    There is a very simple reason for Brazil’s interest in making investments in Central ...

    Fernando Lugo Mendez, Paraguay's presidential hopeful

    Paraguay: Is Another Brazilian Neighbor Veering to the Left?

    After deciding not to seek a constitutional amendment to allow for his consecutive re-election, ...

    Buddy Deppenschmidt

    Well, I’ll Be Damned! The Drummer Was Right After All!

    Never print anything in haste, or in anger, I always say. Well, maybe the ...

    Sweet Anachronism

    When the Portuguese arrived in the early 16th century, they found the native Indians ...

    Brazilian credit card issue by Unibanco

    Plastic Money: Brazilians Own 471 Million Credit and Debit Cards

    Brazilians purchased 31.7 billion Brazilian reais (US$ 19.6 billion) in credit cards in July. ...

    Brazilian Congress Opens Door to Business-Friendly Reforms

    Brazilian equities were little changed, following recent strength. Brazil’s market ebbed, as investors largely ...

    Brazil Drags Latin America Up

    Latin American markets rose, led by a surge in Brazilian equities to a record ...

    Logging in the Brazilian Amazon

    Brazilian Loggers Double Amazon Deforestation Hoping for Amnesty

    In Brazil, deforestation rates in the Amazon, the world’s biggest rain forest, more than ...