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Shifting approaches to Brazilian softs
09 February 2012
The Brazilian soft commodity financing market has seen its ups and downs over the past few years, and the second half of 2011 saw a return to a more cautious approach to lending. Oliver O’Connell looks at the shifting market.
Read more:
Brazil soft commodities
sugar
cotton
corn
soy
BNDES
Caramaru
Multigrain
Cast your mind back to the Brazilian commodity financing scene in early 2009 and you will remember a palpable air of tension and bitterness from those burnt by the impact of the Lehman crisis on agribusiness lending in Latin America. A period of excess liquidity gave way to a dearth of commodity trade finance loans and investors ran away from sugar and ethanol. Producers went insolvent and a period of company consolidation and debt renegotiation ensued.
A year later and the commodity cycle had turned around with sugar prices at almost 30-year highs, but the bank market was slow to respond. Eduardo de Paula Ribeiro Filho, managing partner, BSR Projetos Empresariais, wrote in Trade Finance Magazine at the time: “…banks are moving far too slowly towards a comeback. Many have actually scaled down or completely shut their Brazilian trade and commodity finance (TCF) teams leaving the minimum resources to manage...
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