LatinFinance - January/February 2013 - 65

Infrastructure finance

finance data for the last 10 years and found, to his surprise that
“volumes have been quite stable with just a small peak in 20062007. We’re not far off that peak.”
Optimism for next year centers on belief in a global recovery
in commodities and the roll-out of more public infrastructure,
much through public private partnerships (PPP) projects –
though some strike a note of caution as PPP projects have been
grindingly slow to get off the ground as governments discover
the devil lies in the detail.

by issuing corporate debt. In July, Vale sold €750 million ($980
million) in bonds due 2023, finding demand hit more than €1.8
billion. That comes as Vale is sharply cutting its capex plans
from the $21 billion estimates for last year and in spite of the
big drops in iron ore prices, down nearly 15% year to date in
December.

Funding energy

In the energy sector, the mammoth is Brazil with Petrobras at
its heart, which continues to pump deals into the market with
its $236 billion capex plans for 2012-2016. In spite of a more
Digging for opportunities
cautious note being struck by the new chief executive Maria das
The most prolific sectors in the private sphere continue to
Graças Foster, who has already cut oil production forecasts for
be mining and oil and gas. The former is facing up to fresh
2020 by 11%, the ramp up of the pre-salt exploration is well
challenges amid calls for greater efficiency in the face of volatile
underway.
commodity prices.
Alberto Zoffmann,
“There is a lot of
director of the project
cash but a reluctance
finance department at
to spend on capex,”
Itaú BBA in São Paulo,
says Paul D’Agata,
predicts that Brazil’s
managing director and
oil and gas sector will
head of Spanish Latin
require $450 billion
America corporate and
reais ($216 billion)
investment banking in
in total financing
Mexico for Canada’s
between 2013 and
Scotiabank.
2017, accounting for
Latin America is
half of total investment
doing better than most
needs in the country. To
other regions, says Tim
put that into context,
Chen, chief executive
the three airports
at Grupo Chen in Belo
that Brazil recently
Horizonte, which
put out to concession
focuses on Brazilian
(Guarulhos, Viracopos
projects. Canadian and
and Brasilia) will
European investors
require investments of
are also committed to
just 5 billion reais.
the region. Chen sees
For the most part,
strong demand for Latin Brazilian energy: sunset on international financing?
Petrobras raises finance
America out of Australia
at the corporate level. But for specialized equipment, it has
where prices to develop projects have gone up substantially and
tax uncertainties continue, pushing companies to look elsewhere turned to chartering through its specialist equipment contracting
arm, Sete Brasil. Petrobras contracted seven rigs in 2011 with a
for mining resources.
In the context of higher costs and global uncertainties, raising further 21 rigs ordered in February 2012, giving Sete Brasil more
equity capital has become an issue, especially for juniors. The top than $80 billion in contracts outstanding.
In turn, Sete Brasil contracts companies including Odebrecht
100 miners on the TSX Venture Exchange saw equity financing
Oil & Gas, Schahin and Etesco to provide equipment. They use
slump 41% to $1.6 billion compared with $2.7 billion raised by
future charter payments from Petrobras to issue bonds that can
the top 100 last year, according to PricewaterhouseCoopers.
be used to order Floating Production Storage and Offloading
This makes mining one of the great opportunities for private
equity firms in Latin America, says Victor Muñoz, the São Paulo- (FPSOs), drill ships and related equipment from shipyards.
Expertise mostly lies abroad and international players and deals
based managing director and head for Latin America at private
equity firm Denham Capital Management. He is focused on Chile are proving a significant part of this mix, says Daniel Bartfeld, a
partner in the global project finance group at law firm Milbank in
and Peru, looking at Brazil and sees Colombia as up and coming
New York.
for projects.
Japanese commercial banks have taken a big bite of the
“You need to find management teams that know locally how
business as the Japan Bank for International Cooperation (JBIC)
to operate and have track records of success: these are the key
supports one of the few suppliers and operators of FPSOs,
ingredients,” he says.
Mitsui’s MODEC, says one senior banker at a large Japanese
Miners have also been riding the crest of the low yield wave

January/February 2013

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LatinFinance - January/February 2013

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