BNDES eyes smaller infrastructure funding role as debentures pick up

BNDES eyes smaller infrastructure funding role as debentures pick up

Brazil Bonds Project & Infrastructure Finance

Brazilian infrastructure projects will increasingly be funded through bond issues as BNDES, the country’s development bank, reduces financing in the area, the head of the state-owned lender has said.

BNDES projects that it will finance around 23% of Brazil’s industry and infrastructure by 2015, down from 35% in 2011. Corporate bonds and infrastructure debentures will pick up much of the slack financing a quarter of the sector by 2015, up from 17% in 2011, the bank expects.

“The BNDES share will shrink,” Luciano Coutinho told investors in New York on Tuesday. “The total amount may be expanding slowly, because the whole pie is growing, but we wish to moderate our expansion. We wish to do it in an orderly and coordinated way with the market, so not to harm the investment cycle. Brazil was able to develop a very strong and liquid market for shares, there is no reason why we should not and cannot develop a strong market for bonds and fixed income, particularly related to infrastructure.”

Brazilian companies are preparing to sell around 10 billion reais of infrastructure debentures in 2014, Coutinho said.

“We’re committed to helping the process on the emission of bonds. These are concrete initiatives. BNDES will be engaged and we will be in a close dialogue with the market. So far, we have succeeded in the emission of 4.5 billion reais in infrastructure bonds.

“Looking to the future, in our consultations we already see that around nine to 10 billion reais of bonds to be emitted in 2014 and we hope that these will increase. We’ll be working hard in this direction.”