The World Bank has agreed to guarantee funding to Banco do Brasil, enabling the bank to offer up to US$700mn in trade finance to MSMEs.  

The Multilateral Investment Guarantee Agency (Miga), an arm of the World Bank, will provide a 95% guarantee on a three-year loan provided to Banco do Brasil by BBVA and HSBC, as lead arrangers. 

The Miga guarantee covers the risk of Banco do Brasil defaulting. The guarantee will bring down the bank’s cost of funding, expand its foreign currency credit lines and diversify its funding sources, Miga says in a June 23 statement.  

The first tranche of US$350mn will be disbursed by BBVA and HSBC “immediately”, the agency says.  

The Brazilian bank will use the line of credit to provide “eligible trade-related loans” with tenors of up to one year to MSMEs, with a focus on the agricultural sector and sustainable projects. 

“By expanding access to credit for MSMEs, we are helping unlock their potential to participate in global trade and drive Brazil’s clean energy transition,” says Hiroshi Matano, Miga executive vice-president. “ 

This collaboration reflects our commitment to inclusive economic growth and to addressing global challenges through innovative financial solutions.” 

Banco do Brasil is required to assess the trade loans it provides under the programme against Miga’s exclusion list, applicable environmental and social laws in Brazil, and “sector-specific issues in the agriculture sector”, according to the Miga website.  

The loans will be used for purposes “including the acquisition of equipment and inputs such as biofuels, solar, wind and biomass energy systems”, Miga says. 

Francisco Lassalvia, Banco do Brasil’s vice-president of wholesale banking, says the lender’s international activities are “increasingly aligned with major global agendas”. 

The bank has a “strong presence with multilateral agencies, global banks, and strategic partners to promote sustainable development and enhance the competitiveness of Brazilian companies abroad”, he adds.