IADB to sell debt in Brazil to fund infrastructure projects
BRASILIA - The InterAmerican Development Bank plans to sell debt in Brazil for the first time this year to help finance long-term infrastructure investments in need of long-term funding.
The Washington, D.C.-based lender is considering the offering of 600 million reais ($192 million) in local debt notes known as debentures, a spokeswoman told Reuters on Monday. About half of that amount will be placed in three-year notes to be offered before the end of the year, she added.
Other terms, including the benchmark interest rate that will be used as a peg for the notes, were not immediately disclosed. For years, export credit agencies and multilateral lenders have tapped Brazil’s local debt markets to extend credit to local firms more rapidly and mitigate the impact of currency fluctuations on their cost of borrowing.
“What has been decided so far is that the resources will be used to finance private sector projects, especially in infrastructure,” said the spokeswoman, who declined to be identified, citing bank policies.
The announcement came a day before President Dilma Rousseff was scheduled to unveil a massive program of infrastructure concessions for road, airports, railways and ports to help revive an economy bracing for its steepest recession in over 20 years. The program is expected to offer attractive conditions for private investors, including high rates of return for their projects.
Investors and multilateral lenders such as the IADB are already working on how to obtain or provide financing for the program, which will entail less subsidized funding from state development bank BNDES than in past occasions. Currently, the government is cutting spending to narrow a swelling budget deficit, lowering funds available for BNDES.
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