Investors are trying to flee struggling Brazil bank and increase bond returns

(Bloomberg)-Individual investors are trying to shower Banco Master SA bonds, and returns higher returns and make it more difficult for the struggling money shooter to raise cash needed for short-term obligations. A total of more than 10 billion Reais ($ 1.7 billion) in Banco Master Time Deposit certificates, called CDBS, is for sale on retail platforms at XP Inc. and Banco BTG Pactual SA, according to data compiled by Bloomberg. Investors offer returns as high as inflation plus 11.5% for expiry dates in May 2026, compared to inflation plus 8.5% for CDBs of smaller rival Banco Pine mature in June 2026. The prices suggest that the Master has to pay even more to sell new debt to the few investors who are still willing to buy. Investors download the debt after the bank announced in March in March that a controversial agreement should be purchased by BRB SA, the bank owned by the capital of Brazil. Critics of the agreement say it is equivalent to a government boss of a firm that was allowed to risk too long. Representatives from Banco Master and BRB did not answer messages that commented. Master has approximately 8.3 billion Reais in deposits ripening in the first half of this year, and more than 4.6 billion Reais in the second half, according to the balance sheet of 2024. A total of 16 billion debt tax will mature this year. This is the fact that most of the bank’s assets are difficult to sell, including bonds linked to payments and shares of small and middle -sized companies, some of which are struggling financially. Two analysts who spoke to Bloomberg are questioning whether the deposit insurance fund known as FGC must provide an emergency credit line to master possible liquidity problems. They asked not to be identified with a sensitive matter. It can buy time while discussing a long -term solution by the central bank, BRB and the largest Brazilian lenders, which are the largest contributors to FGC. FGC declined to comment. The expansion of Banco Master was fast. With its lending portfolio growing an average of 86% a year, the bank rented a Splashy office in Miami and started acquiring competitors. But to grow so fast, Master borrowed money from individual investors who rely a lot on an incentive offered by FGC, which ensures time deposit effects in Brazil of as much as 250,000 Reais per individual by bank. But a central bank rule change in December 2023 raised the future of the bank and pushed it to seek a buyer. Under the agreement with BRB, part of the bank would remain in a separate holding company that would not be part of the agreement. It is not clear which assets and liabilities are part of the holding or as the controlling shareholder of the Banco master, Daniel Vorcaro, must inject money into the transaction or receive money from it. Vorcaro would have 51% of Banco Master’s voice share, which would remain as a separate entity under BRB. The BRB transaction must also be approved by the Brazilian central bank, who is waiting for more details to decide, according to a person with knowledge of the case. A solution that non-governmental lenders who buy assets are also on the table, lazy people who are familiar with the matter. According to analysts estimates, FGC has 107.8 billion Reais in liquidity in liquidity, and it will need as much as 50 billion Reais to pay master investors, including interest. More stories like these are available on Bloomberg.com © 2025 Bloomberg LP first published: 11 Apr 2025, 06:25 pm Ist