BRAZIL: In Symbolic Voting, House Passes New BNDES' Benchmark Interest Rate

(RTTNews) - In a symbolic vote, the Brazilian House of Representatives passed a provisional measure that establishes the Long Term Rate (TLP) as the new benchmark interest rate of Brazil's National Bank for Economic Development and Social (BNDES).

From now on, the Brazilian lawmakers will vote on the highlights to the approved text.

The TLP will replace the Long-Term Interest Rate (TJLP) in the credit lines granted by the BNDES from January 1, 2018. One of the main complaints regarding the new rate is that the TLP will be higher than the interest of the current loans.

The new rate will be based on interest linked to a National Treasury bond (NTN-B) plus the variation of the National Consumer Price Index (IPCA). Currently, the TJLP is calculated quarterly, based on the future inflation target for the 12 following months and a risk premium set by the National Monetary Council (CMN).