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Credit Suisse Mato Grosso Loan May Get Securitization Hurdle

Credit Suisse Group AG’s pending $1 billion federally-guaranteed loan to the Brazilian state of Mato Grosso probably will come with restrictions on the bank’s ability to repackage it into securities, a state official said.

That’s because the federal government, which must approve the loan, doesn’t want such securities to compete in the market with its own bonds or those of government-owned companies, according to Mato Grosso’s deputy finance secretary, Vivaldo Lopes.

While terms of the loan may not include an outright ban on securitization, they probably will make it more difficult, Lopes said yesterday in an interview at the LatinFinance Issuers and Investors Forum in Sao Paulo.

An official for Credit Suisse in Sao Paulo, who asked not to be identified in accordance with company policy, declined to comment. A Treasury official also declined to comment.

Mato Grosso, in western Brazil, has said it plans to use some of the loan proceeds to refinance principal still owed to the federal government after a bailout in 1997.

Earlier this month, Credit Suisse and JPMorgan Chase & Co. sold notes backed by a $1.27 billion federally guaranteed loan the Zurich-based bank had made to the state of Minas Gerais.

Because of the guarantee, the securities offer investors the backing of the Brazilian government with yields higher than those on sovereign bonds.

The notes backed by the Minas Gerais loan yielded 4.03 percent at 1:31 p.m. in Sao Paulo, according to data compiled by Bloomberg. That compares with 2.73 percent for similar-maturity bonds issued by the Brazilian government and 3.97 percent for the government-owned mortgage lender Caixa Economica Federal, according to data compiled by Bloomberg.

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