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This memorandum aims at informing about Provisional Measure
("Medida Provisória") No 564, dated April
3, 2012, which, among other provisions, authorizes the Federal
Government to participate in funds dedicated to guaranteeing export
transactions or infrastructure projects as well as to create the
Agência Brasileira Gestora de Fundos e Garantias
S.A. – ABGF.
This Provisional Measure authorizes the Federal Government to
participate, as a quotaholder and up to the amount of R$
14.000.000.000,00 (fourteen billion reais), in funds which
purpose is to guarantee:
- commercial risks in export transaction with a term exceeding
2 years;
- political and extraordinary risks in any export transaction;
and
- default risk in the export of goods and services, as further
specified in its by-laws.
Furthermore, the Provisional Measure authorizes the Federal
Government to participate, as a quotaholder and up to the amount of
R$ 11.000.000.000,00 (eleven billion reais), in funds with
the specific purpose of guaranteeing, directly or indirectly, risks
of (i) credit, (ii) performance, (iii) default in contractual
obligations or (iv) engineering, in the following operations:
- infrastructure projects provided by the Programa de
Aceleração do Crescimento –PAC or
strategic programs established by the Federal Government;
- financing of the shipyard industry;
- credit lines for air carrier companies;
- public-private partnership agreements, as defined by
Brazilian law; and
- other strategic infrastructure projects, as determined by the
Federal Government from time to time
This second fund will be able to offer direct protection
whenever the insurance market is not able to provide coverage for
these risks, either totally or partially.
On the other hand, every time the insurance market is taking 20%
or more of the risk in a given operation, the fund may indirectly
cover such risks. In this case, the insurance and reinsurance
companies shall pay a fee to the fund, as defined in its
by-laws.
Finally, the Provisional Measure authorizes the Federal
Government to create the Agência Brasileira Gestora de
Fundos e Garantias S.A. – ABGF, a state-owned
company related to the Ministry of Finance.
ABGF will be subject to the regulations applicable to insurance
companies and will be regulated by the Brazilian insurance agency,
the Superintendence of Private Insurance - SUSEP. SUSEP may,
however, exempt ABGF from some of the insurance regulations.
ABGF will grant guarantees in relation to the following
risks:
- credit life in relation to public housing financing;
- damages to the real estate in relation to public housing
financing;
- credit in relation to public housing financing;
- commercial risks in export transaction with a term exceeding
2 years;
- political and extraordinary risks in any export
transaction;
- default risk in the export of goods and services, as further
specified in its by-laws;
- credit in relation to public agribusiness financing;
- credit in relation to micro, small and medium size company
financings; and
- credit in relation to public educational financing.
ABGF shall not longer be authorized to grant guarantees whenever
the above risks find insurance at the same prices and conditions
offered by the ABGF.
This Provisional Measure entered into effect on April 4,
2012.
As usual, we will be closely following up such matters and we
shall keep our clients and partners informed.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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This memorandum addresses Decree No. 7.976 of April 1, 2013, which authorizes the incorporation by Brazil′s executive branch of the Agência Brasileira Gestora de Fundos Garantidores e Garantias S.A., a state-owned company to be organized as a corporation and linked to the Ministry of Finance, as described in our memorandum dated June 1, 2012.
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