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BNDES looks to bonds to broaden PPP funding
02 February 2011
The Brazilian bond market is now open for road issuers looking for long-dated no-strings project financing. But are institutions’ appetites enough to meet governments’ requirements? John Rumsey reports from Sao Paulo.
Brazil’s gross domestic product grew 7.5% in 2010, but the country suffers from low savings rates and investment in roads has historically been poor. As a result, it’s become common to observe that Brazil is facing a logistics crisis. But there is huge potential for new road projects throughout Brazil, says Renato Proença Lopes, executive director on the commercial board at Banco do Brasil (BB). Less than 10% of the country’s highways are currently under concession, he notes.
The giant national development bank, BNDES, has been the dominant player in financing such projects in recent years. But bankers are worried the bank’s support might flag as it is called upon to finance the 2014 World Cup, 2016 Olympics and the government’s two, highly ambitious, Growth Acceleration Programs, covering not just roads but ports and airports, sanitation and energy, security and others. “We will need some creativity if all road projects...
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