Banking & Finance - Legal Developments

Two important legal developments have been taking place in Brazil on the financing front. Both have been long-lasting requirements of the market in the country, which little by little seems to be overcoming a number of relevant legal issues which have historically hampered credit transactions.

The first improvement relates to the insertion of a provision in the new Mining Code under discussion at the Congress of the possibility of borrowers offering mining exploitation rights to lenders as security for financial transactions. Though detailed regulation of the matter is still expected once the Mining Code is finally enacted, the bill expressly opens room for transactions backed by rights over long-term mining concession agreements (e.g. 40 years renewable) upon evidencing to lenders the production potential of mineral deposits bid by the Government, similarly to energy purchase and sale agreements, which are usually offered as security for lenders, specially the Brazilian Development Bank - the BNDES.

Agribusiness financing, in turn, which legislation was significantly improved in the country over recent years to serve Brazil's strongest potential in the global economy, also seems to take one step ahead with the creation by the National...