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TEXT-S&P says Brazilian bank credit spreads remain resilient
July 25, 2012 / 7:08 PM / 5 years ago

TEXT-S&P says Brazilian bank credit spreads remain resilient

(The following statement was released by the rating agency)

July 25 - The 2008 financial crisis showed in dramatic fashion how interconnected the world’s banking institutions are, so there is understandable concern about how stable Brazil’s banks are at the moment, given that Europe and Brazil are significant trading partners. In a report just published on RatingsDirect, Standard & Poor’s Ratings Services looked at four large, ‘BBB’ rated Brazilian banks and found that their bond spreads and yields appear to be holding up well against the pressures that have caused bond spreads to widen at many other global banks. (Watch the related CreditMatters TV segment of “Capital Markets Update,” dated July 24, 2012.)

The article, titled “Brazilian Bank Credit Spreads Remain Resilient Amid Financial Turmoil,” says that when Brazil’s economy slowed during the first few months of this year, loan growth at the four banks slowed to only 2% in the first quarter-the lowest growth since early 2009. And although bank profits remain adequate, asset-quality ratios are worsening. But economic conditions are likely to improve in the second half of the year, so we expect these banks’ loan portfolios to increase between 17% and 21%. (Caryn Trokie, New York Ratings Unit)

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