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Brazilian loans participated in the phase I CGA. In contrast,
almost all of the foreign lenders participated in the phase II
CGA.8
The loans made to the Central Bank under the phase I and phase
II DFA's and CGA's were net loans that had repayment terms of 7 to
9 years. In the phase I and phase II DFA's and CGA's, provision
was made for funds that would otherwise be lent to the Central
Bank, as borrower, to be alternatively lent or relent to other
Brazilian persons and companies. Many of the foreign lenders
wanted to maintain their business relationships with their longtime
Brazilian customers. They thus wanted their customers to have some
ability to borrow and take out loans from the large amount of
foreign exchange and capital to be provided by the foreign lenders
to the Central Bank pursuant to the DFA's and CGA's. The phase I
DFA, phase II DFA, phase I CGA, and phase II CGA each provided that
there would be an initial period of about 16 or 18 months during
which DFA and CGA funds could be alternatively lent or relent to
other Brazilian persons and companies (the relending period).9
Phase I
After the Brazilian Government imposed its foreign debt
repayment moratorium in December of 1982, Citibank and Morgan Bank,
8 No phase III CGA was entered.
9 As part of the later phase III restructuring discussed
more fully infra, the relending period for the phase II DFA was
extended from June 30, 1985, to April 1986, and the relending
period for the phase II CGA was extended from June 30, 1985, to
March 1986.
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