The crisis in Brazil is creating a new set of problems for bankers who lent that country's companies more than $4 billion in 1998.

At issue are at least 11 bridge loans made mostly to newly privatized Brazilian utility companies. Those companies planned to pay off the loans by issuing corporate bonds or equities.

"There isn't any appetite in the capital markets for Latin American issuers," said Bill Craighead, a Latin America loan market analyst for Loan Pricing Corp. in New York. "They're essentially closed."

As a result, the loans will have to be renegotiated, or rolled over, under terms that could be very costly to the borrowers.

The largest at risk appears to be a $875 million loan to Light Servicos de Electricadad SA, a Rio De Janeiro-based electric utility. That loan, set to mature in April, was led by Citigroup, Deutsche Bank, Merrill Lynch & Co., and Societe Generale.

Standard & Poor's cited Light Servicos' problems Jan. 14 when it put the company on "credit watch," the ratings firm's list of companies that could be in line for a downgrade.

S&P said the devaluation of Brazil's currency, the real, hurts companies such as Light Servicos, because their debts are in U.S. dollars but their revenues are in reais.

"Some of these companies were hedging against a currency devaluation with short-term financial instruments," said Maria Lemos, a Standard & Poor's analyst in New York. "But that's only a short-term help."

Though Brazil lets utilities increase rates when the real falls against the dollar, the increases are limited and not likely to offset the imbalance, the report said.

What makes the Light Servicos loan so problematic, analysts and bankers say, is its early maturation date. The loan's terms essentially give only 100 days for the Brazilian bond market to recover or for the real to bounce back. As of Friday morning, the real had lost 28% of its value against the U.S. dollar since Jan. 13.

The loan is also the victim of its popularity. During its syndication last year, 27 banks committed to the deal. Now, all of those banks must agree to new terms should the loan be rolled over.

"I take it as a challenge," said a U.S. banker in the lead group who asked not to be identified. Fixing errant bridge loans "can be a real headache for some, but I enjoy it. We can really show our stuff."

Other U.S. banks have exposure to large Brazilian bridge loans, according to Loan Pricing. Among them: BankAmerica Corp., Bankers Trust Corp., J.P. Morgan & Co., and Warburg Dillon Read.

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