PwC Affiliate Among Two Bidders to Price BNDES Distressed Debt

Brazil asset manager JGP Gestao de Credito Ltda. and a PricewaterhouseCoopers LLP affiliate submitted bids to BNDES, the nation’s development bank, to price 6.1 billion reais ($3 billion) of nonperforming loans.

The bids from PricewaterhouseCoopers Corporate, Finance & Recovery Ltda. and Rio de Janeiro-based JGP were disclosed today on the government bank’s website.

“We have a very diligent team that has been able to recover a large portion of distressed assets,” BNDES President Luciano Coutinho said in a conference call. “We have other, particularly small, credits in the past that we’ve been struggling to recover and maybe we should follow the example of many other banks in having adequate pricing for these, so we’re hiring expertise for how to better recover credit.”

The 6.1 billion reais represents the value of 1,020 loans on the day the borrowers defaulted, plus two months’ interest. They would be valued at 37 billion reais when accounting for inflation, penalties and accrued interest on the loans, some of which are more than 20 years overdue. Investors seek to turn a profit by recouping money from borrowers after buying the soured loans at a steep discount.

The transaction would be BNDES’s first distressed-asset sale, which could reduce the bank’s delinquency rate and boost its capacity to make more loans. The tender process should be completed by the end of the year, according to Rio de Janeiro-based BNDES, which would determine whether to sell the nonperforming loans after the winning bidder conducts a study.

BNDES, with a total credit portfolio of 492 billion reais and 716 billion reais of assets, disbursed 156 billion reais of loans last year.

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