Latin Finance - November/December 2012 - 16
Brazil infrastructure
Redemption road
By John Rumsey
M
uch fanfare has accompanied Brazil’s announcement of an ambitious $133 billion reais ($66 billion) infrastructure investment program. A new law to jumpstart longterm debentures has raised hopes that the private sector will finally prove a key player in the sector. But the market may prove less attractive to foreign investors than the hype would suggest. Law 12,431, which finally passed in an amended version as law 12,715 on September 17, was greeted with enthusiasm. It provides tax breaks to investors when they invest in debentures with tenors over four years. The amendments are well written and addressed the doubts of investors over liabilities for non-compliance with government conditions on tax exemptions, for example, says Marcelo Leitão, head of debt capital markets at the São Paulo office of Portuguese bank Banco Caixa Geral. “This is an important event. A series of issuers has been waiting for this law to be passed,” says Daniel Vaz, partner and head of debt capital markets at BTG Pactual in São Paulo. “As interest rates have come down leveraging infrastructure projects is much more viable,” he says. The new law means capital markets will become integral to project financing and thus sponsors will have less need to commit equity, he says. In September, the first transactions – albeit small in size – began to hit the market. The first was a $25 million reais sale from Montes Claros transmission project, owned by Spain’s ACS. The 17-year inflation-linked debenture pays 8.75%, and was placed with 18 investors from the wealth management division of
Brazil’s bold infrastructure push has been heralded as a game changer. Investors, however, may balk at low yields – and risks that remain hard to evaluate
At the crossroads: infrastructure investment lead manager BNP Paribas. Montes Claros tapped the restricted Instrução 476 market, and was followed in October in the widely-marketed Instrução 400 market by toll road operator Companhia de Concessões Rodoviárias (CCR). CCR’s AutoBan concession included a 135 million real 12,431-compliant tranche as part of a 1.1 billion real sale. The inflation-linked tranche pays 2.7%, and priced flat to the government NTN-B bond. Banco do Brasil, Caixa and HSBC managed. Though investors say there is significant demand for domestic credit, the infrastructure debentures are likely to remain limited in size until the asset class finds its feet. Until then, they will also be sold to locals only. Some bankers note it may take a name like Petrobras or Vale to lure foreigners into infrastructure bonds. In July, the concession holders of the highway Rodovias do Tietê toll road had attempted to place an infrastructure bond for $650 million reais to take out a bridge loan, and targeted international buyers. Investors proved wary and the concession holders were obliged to turn to BTG Pactual for further short-term funding. Bankers in São Paulo blamed both the
16 LatinFinance
November/December 2012
©REUTERS
Latin Finance - November/December 2012
Table of Contents for the Digital Edition of Latin Finance - November/December 2012
Latin Finance - November/December 2012
Contents
The big easy
Rules of the game
Terms of endearment
Rise of the redback
Good buys
Winning streak
Awards in full
Staying the course
Revolutionary road
Latin Finance - November/December 2012 - Latin Finance - November/December 2012
Latin Finance - November/December 2012 - Cover2
Latin Finance - November/December 2012 - Contents
Latin Finance - November/December 2012 - 2
Latin Finance - November/December 2012 - 3
Latin Finance - November/December 2012 - 4
Latin Finance - November/December 2012 - 5
Latin Finance - November/December 2012 - 6
Latin Finance - November/December 2012 - 7
Latin Finance - November/December 2012 - 8
Latin Finance - November/December 2012 - 9
Latin Finance - November/December 2012 - 10
Latin Finance - November/December 2012 - 11
Latin Finance - November/December 2012 - The big easy
Latin Finance - November/December 2012 - 13
Latin Finance - November/December 2012 - 14
Latin Finance - November/December 2012 - 15
Latin Finance - November/December 2012 - Rules of the game
Latin Finance - November/December 2012 - 17
Latin Finance - November/December 2012 - 18
Latin Finance - November/December 2012 - 19
Latin Finance - November/December 2012 - 20
Latin Finance - November/December 2012 - 21
Latin Finance - November/December 2012 - Terms of endearment
Latin Finance - November/December 2012 - 23
Latin Finance - November/December 2012 - 24
Latin Finance - November/December 2012 - 25
Latin Finance - November/December 2012 - 26
Latin Finance - November/December 2012 - 27
Latin Finance - November/December 2012 - Rise of the redback
Latin Finance - November/December 2012 - 29
Latin Finance - November/December 2012 - 30
Latin Finance - November/December 2012 - 31
Latin Finance - November/December 2012 - Good buys
Latin Finance - November/December 2012 - 33
Latin Finance - November/December 2012 - 34
Latin Finance - November/December 2012 - 35
Latin Finance - November/December 2012 - Winning streak
Latin Finance - November/December 2012 - 37
Latin Finance - November/December 2012 - Awards in full
Latin Finance - November/December 2012 - 39
Latin Finance - November/December 2012 - 40
Latin Finance - November/December 2012 - 41
Latin Finance - November/December 2012 - 42
Latin Finance - November/December 2012 - 43
Latin Finance - November/December 2012 - 44
Latin Finance - November/December 2012 - 45
Latin Finance - November/December 2012 - 46
Latin Finance - November/December 2012 - 47
Latin Finance - November/December 2012 - 48
Latin Finance - November/December 2012 - 49
Latin Finance - November/December 2012 - 50
Latin Finance - November/December 2012 - 51
Latin Finance - November/December 2012 - 52
Latin Finance - November/December 2012 - 53
Latin Finance - November/December 2012 - 54
Latin Finance - November/December 2012 - 55
Latin Finance - November/December 2012 - 56
Latin Finance - November/December 2012 - 57
Latin Finance - November/December 2012 - 58
Latin Finance - November/December 2012 - 59
Latin Finance - November/December 2012 - 60
Latin Finance - November/December 2012 - 61
Latin Finance - November/December 2012 - 62
Latin Finance - November/December 2012 - 63
Latin Finance - November/December 2012 - Staying the course
Latin Finance - November/December 2012 - 65
Latin Finance - November/December 2012 - 66
Latin Finance - November/December 2012 - 67
Latin Finance - November/December 2012 - 68
Latin Finance - November/December 2012 - 69
Latin Finance - November/December 2012 - 70
Latin Finance - November/December 2012 - 71
Latin Finance - November/December 2012 - Revolutionary road
Latin Finance - November/December 2012 - Cover3
Latin Finance - November/December 2012 - Cover4
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