Brazil's government and the Federal District have reached a deal for a loan to support struggling state-run lender BRB.
The deal allows the Federal District to contract a loan of approximately 6 billion reais ($1.19 billion) from credit-guarantee fund FGC.
Guarantees are secured from a bank syndicate using the district's revenue flows from state and municipal participation funds as collateral.
Lenders Bradesco, Itau Unibanco, BTG Pactual, Caixa Economica Federal, and Banco do Brasil are part of the syndicate.
No federal guarantee will be provided. Brazil's Treasury considers the Federal District lacking adequate payment capacity.
As part of the deal, the Federal District commits to adopting fiscal adjustment measures.
BRB has been trying to address losses tied to allegedly fraudulent credit portfolios bought from Banco Master.
Banco Master was liquidated by Brazil's central bank in November amid severe liquidity challenges.
