Kroton Extends Slide as Brazil Makes Student Loans Harder to Get

Kroton Educacional SA, the world’s biggest for-profit operator of colleges, posted its biggest five-day decline since 2008 after Brazil made it more difficult for students to obtain loans.

The shares fell 8.7 percent to 12.65 reais at the close in Sao Paulo and dropped 24 percent since Dec. 26. Competitor Estacio Participacoes SA slumped 7.2 percent to 19.30 reais, extending its four-day loss to 25 percent, also the biggest since 2008. The Ibovespa added 1 percent today.

Brazil’s Education Ministry increased the minimum grade on the exam students take in applying for the loan known as Fies and prohibited them from having more than one loan at a time, according to the Dec. 29 official gazette. Finance Minister Joaquim Levy has pledged a more disciplined fiscal policy after the budget deficit widened in November.

The “surprise” changes aim to “make Fies less burdensome for the government in a year of tight budgetary adjustments and to increase standards and controls,” Marimar Torreblanca, an analyst at UBS AG, wrote in a research report to clients published today.

The budget deficit for the central government, states and municipalities widened in November to 41.6 billion reais ($15.4 billion) from 17.8 billion reais a month earlier. That was bigger than the forecasts of all five economists surveyed by Bloomberg, whose median estimate was 30 billion reais.

The changes are part of efforts to improve the quality of higher education in the country, the press office of the National Fund for the Development of Education, the agency of the ministry that manages student loans, said in an e-mailed response to questions. Kroton’s press office said by e-mail that it’s still analyzing the changes.

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