Brazilian Guaranteed Debt
This is the first installment of a multi-part series about the Brazilian Garanteed Debt. See Part 2.
AN UNCOMFORTABLE TOPIC. Debt is an awkward topic for many people in Brazil. Some feel uneasy as their finances may become exposed, creating anxiety and adding constraints on their ability to spend money at their own will. This somehow painful situation could get worse if one realizes it may be called in to assume other’s people debt, further constraining its own finances.
We could’ve been talking ABOUT you, we’re talking TO you about the possibility of the Federal Government to serve the debt of other public entities. This may look like something too distant from your daily life, if you understand the Federal Government as an abstract entity. However, when you realize there has been a reduction on public investments and on social security policies, when public servants payroll is fractioned and when contracts with suppliers are suspended, we’ve got hints that the negative effects of debt have reached the ordinary citizen. Would you like to understand how is this affecting you?
Initially, we can see the size of the obligations the Federal Government has guaranteed from other entities. In other words, what is the stock of the debt that could be assumed by the Federal Government if the guaranteed entities (mostly local governments and SOEs) fail to serve its original obligations?
Type of entity:
Guaranteed debt:
Values in Apr-20 position. Source: Guaranteed Debt Report (GRD) 1st Quarter 2020
For the Federal Government it’s relevant to monitor not only the outstanding guaranteed debt, but who are the original debtors as well as the terms and conditions of the original loans. This information is important to assess the risk of the debtors and to fulfill their obligations in case the guarantee is called.
At this point it is important to understand which projects from your state, municipality or even SOEs are funded by guaranteed loans. If the original debt cash flow is observed, the Federal Government is not required to act. We publish the available information about the project financed to provide transparency on the topic.
Table: Summary of main figures
Some definitions are noteworthy:
- ATM
- Average Time to Maturity, represents the average time of the incoming maturities for the debt owed by the debtors.
- Average cost
- It is the 12-month cumulated average cost of the debt, represented as a percentage per year rate.
- Domestic
- Guaranteed debt originated from domestic lenders and denominated in local currency (Ex: BRL).
- Domestic-FX-linked
- Guaranteed debt originated from domestic lenders and denominated in local currency but indexed to a foreign exchange rate (ex: USD/BRL).
- External
- Guaranteed debt originated from external lenders and denominated in foreign currency (Ex: USD).
Choose the debtor of your preference. You can use the filters to choose by type of entity first.
| Total Guaranteed Debt | |
|---|---|
| DOMESTIC | |
| FX-Linked | |
| Other | |
| EXTERNAL | |
| ATM | |
| Average Cost |
Maturity profile
Federal Guarantees for this debtor
The values displayed in the table are the original contractual values. The total values can differ from the table above, which display the outstanding debt as of Apr-20.
The projects marked by a colored borderline have been object of default by the original debtor. These defaulted installments were paid by the Federal Government — see Part 2.
No projects for this debtor.
| Project | Creditor | Currency | Contracted Amount | Signing Date |
|---|
Nonetheless the situation changes completely if the payments are not undertaken. Are you curious about it?