BNDES, Brazil’s state development bank and Oi shareholder, hit out at Portugal Telecom over an undisclosed bond investment and so increased the strain between the two operators as they move to combine assets.

The Portuguese incumbent, behind Oi’s back, bought €897 million of commercial paper issued by Rioforte, a member of the Portuguese Espirito Santo group (which is a major shareholder in Portugal Telecom).

Commercial paper is a short-term investment and usually not backed by any form of collateral.

BNDES, in a statement quoted by Reuters, said the bond investment was “inconsistent with minimum standards of good corporate governance”.

Portugal Telecom said last week it would cooperate fully with Oi shareholders by providing all requested information, but that has clearly not satisfied BNDES. Along with other shareholders, the bank has seen Oi’s share price fall amid analyst warnings of potential credit risk from the Rioforte investment.

“We believe transactions with large shareholders without proper disclosure to minorities are negative to corporate governance,” wrote JPMorgan Securities analyst Andre Baggio, quoted by Reuters.

Baggio added, however, that if Oi pushes for a lower valuation of Portugal Telecom’s assets, the improved merger terms should boost the Brazilian operator’s share price.

Portugal Telecom’s treasury applications in Rioforte’s commercial paper are due to mature on 15 and 17 July 2014 (€847 million and €50 million, respectively) with an average annual remuneration of 3.6 per cent.