Officials of several key banks reportedly are now convinced that Brazil must have lower interest rates and longer repayment periods on new and refinanced loans that it needs this year and next.
The bankers, who asked not to be identified, said at least one member of the bank committee that negotiates with Brazil now believes Latin America's biggest debtor, which owes $92 billion, may find it next to impossible to meet its financial obligations unless it gets far easier terms from its banks. The bankers, including the negotiating bank, which they refused to identify, are expected to try to persuade other banks of the need to ease the terms.
The 14-bank advisory committee that represents Brazil's several hundred bank creditors will start discussions tomorrow on the terms of the new $6.5 billion in loans that banks have been told they should make to Brazil between now and the end of 1984. That money is part of an overall $11 billion package--including $5.5 billion in government assistance--put together by the International Monetary Fund. It is designed to enable Brazil to pay interest on its loans, buy vital imports and make crucial investments.
The banks also will be expected to refinance about $5.4 billion in loans that mature in 1984. They already agreed to refinance $4.8 billion of debt that came due in 1983.
The $6.5 billion in new bank lending is to be an addition to the $4 billion banks agreed to lend earlier this year. The IMF made Brazil a three-year $4.7 billion loan.
Brazil is behind about $2.5 billion in interest payments to its bankers, mainly because the banks and the IMF stopped making payments on their loans until Brazil made what they felt was a more serious effort to reduce inflation and bring public spending under control.
Brazil and the IMF reached tentative agreement on a stringent new set of economic goals earlier this month. If the IMF board of directors ratifies the agreement in November--as is expected unless political pressures in Brazil scuttle the austerity package--then Brazil presumably can bring its interest payments on its public borrowings up to date.
The banks charged Brazil both big fees and interest rates that averaged about 2 percentage points over the U.S. prime rate (which is 11 percent today) for the loan packages negotiated earlier this year. Banks made similar deals with other major debtors like Mexico and Argentina.
The banks cited the increased risks in lending to financially strapped debtor nations as the reason for the higher loan charges, although some lenders said they thought the fees were too high.
Several bankers said this week that even some members of the advisory committee have concluded that the high charges are making it harder for Brazil to pay its debts, making the loans even riskier.
In another development yesterday, United Press International reported last night that creditor banks have decided to postpone until Oct. 17 disbursement of a $500 million loan payment to Argentina until they can assess the impact of an Argentine judge's ruling that a $220 million rescheduling of debt for the airline, Aerolineas Argentinas, was invalid.
UPI said Judge Federico Pinto Kramer's ruling in Buenos Aires Tuesday declared that renegotiation terms of the $220 million debt of the airline signed last week included unreasonable guarantees and provisions giving preference to U.S. courts in case of non-payment.
The ruling "suspends all concrete measure . . . in the renegotiation of the foreign debt of public companies," an official in Buenos Aires said.