Brazil | Unconventional Support, Unintended Outcomes?: Latin America | Banks

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Brazil | Unconventional Support, Unintended Outcomes?: Latin America | Banks

Latin America | Banks EquityJuneResearch26, 2026

Exhibit 1 - Brazil: Frontbook of selectedBrazil | Unconventional Support, Unintended

Government credit programs (BRLbn)

160Outcomes?

120There appears to be little indication that the government intends to scale back

its support through guaranteed lending programs. While these schemes are 100

supportive of GDP growth in the short term, their increasingly unconventional 8060

use is not without longer-term risks. Some food for thought. 40

BRL2bn equity Injection into PEAC-FGI. We learned this week that Brazil's Treasury is injecting 0 2020 2021 2022 2023 2024 2025 2026 (ann)

BRL2bn of equity into FGI, the guarantee fund backing PEAC, one of the country's largest PRONAMPE FGI PEAC

.

government-guaranteed credit programs. The move is intended to support new loan origination Source: Jefferies estiamtes, Banco do Brasil, BNDES, FGI, FGO.

through the remainder of the year following a record 2025, when the program generated BRL122bn

in bank credit. By our estimates, PEAC-FGI was operating at roughly 8x leverage in Dec-25, its Exhibit 2 - Brazil: Outstanding credit of

highest level since the Treasury injected BRL20bn to establish the emergency facility during the selected Government credit programs (BRLbn)

pandemic. 300

From emergency to Permanent Policy? The Brazilian government introduced several support

measures in 2020 to mitigate the economic effects of the pandemic, including government- 200

guaranteed credit lines designed to encourage bank lending through risk-sharing mechanisms. 150

The two largest programs were PEAC-FGI, backed by the FGI and administered by BNDES, and

PRONAMPE, backed by the FGO and managed by Banco do Brasil. 100