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Jennifer Lynn
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Jennifer Lynn is a proficient investor, executive and manager working with analytics data to drive smart business decisions. Technology, eCommerce, Management, Healthcare, Consulting, Strategy. Passionate for Finance, IT & Emerging Markets. Email: consultbydigital @
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  • Banco Do Brasil Lending Concerns 0 comments
    Aug 10, 2013 7:04 PM
    Banco do Brasil SA (BBAS3:SA) stock surged from previous years which were at low levels. The upswing resulted from economic unemployment and rising salaries. Credit grew around 16% in 2012 and it is expected to slow slightly this year, but it will remain at around 14%. Banco do Brasil is presently at a yield of 3.875%. The largest bank had, the world's largest initial public offering so far in 2009, was trading flat recently on the Sao Paulo Stock Exchange and down 1% on the New York Stock Exchange. At $8.04 billion, the deal eclipses the $7.34 billion raised by China State Construction Engineering Corp. in an IPO earlier this year, according to data from Dealogic. According to Reuters, "During the quarter, the default ratio at Itaú Unibanco Holding SA fell to its lowest since early 2009, when a merger formed Brazil's largest private sector lender, executives said this week. The default ratio measures the value of loans in arrears for 90 days or more as a percentage of a lender's outstanding loan book." On Friday, Banco do Brasil SA (BBAS3:SAO) closed at 22.81, 13.88% above the 52 week low of 20.03 set on Jul 05, 2013.

    José Maurício Pereira Coelho, Financial Director for Banco do Brasil stated "Assets sold €700 million in five-year bonds, more than the €500 million it had originally planned to sell, after demand topped €2 billion." The last time the bank sold euro-denominated bonds, in January 2011, it sold €750 million in five-year bonds at a yield of 4.5%.

    Emerging Markets

    The second round of monetary easing in the United States was in the later part of 2010. At this time emerging markets struggled with adapting quantitative easing and the U.S. which could impede on lowering the value of currencies. Investors, clammer with Banco do Brasil recent deal however with emerging markets are still vulnerable while the timing comes at a questionable time for the acceptance of a possible ease of the monetary policy in the U.S with Brasil markets.

    Banco do Brasil sold $2 billion in dollar-denominated perpetual bonds earlier this year. The deal was to improve its financial areas and continue to move forward with rapid credit growth. Banco do Brasil's credit grew to 16% in 2012 and is expected to slow slightly throughout this year. In 2013, growth will remain at around 14%.

    For investors, the economic conditions outlook looks optimistic for improvement. As a result Banco do Brasil can adapt to this market quickly as an existing reputable Bank to international countries. The bank will issue the latest bonds under its global medium-term note program, which has a limit of $5 billion, and it is planning to use the proceeds for general banking purposes, according to Standard & Poor's Ratings Services.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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