The European Investment Bank (EIB), the European Union's (EU) long-term financing institution, is lending USD 25 million (equivalent to ECU 22 million) to Pirelli Cabos, a subsidiary of Italy's Pirelli S.p.A., for the construction of a new optical fibre plant in Sorocaba, in the State of São Paulo.
This loan is the first financing granted by the EIB to a borrower located in Brazil and features the EIB's favourable lending conditions for private capital investment projects in Asian and Latin American countries. In addition to limiting the guarantor's (Banca Commerciale Italiana) coverage to non-sovereign risks, the loan has a long tenor (10 years) with a 3,5 year grace period and is extended on the EIB's attractive interest rates. The sovereign risks (non-convertibility and non-transferability of currency) are covered by the European Union's budgetary guarantee.
The present loan is provided in the context of the European Union's co-operation policy with third countries that have concluded co-operation agreements with the EU. In Asia and Latin America (ALA), the EIB may lend up to ECU 900 million during 1997-99 to support technology-transfer capital investment projects or projects implemented by joint-ventures between EU and ALA companies. For private sector projects, the security required by the EIB is limited essentially to covering the non-sovereign risks involved in the financing. The EIB can also support projects implemented by the public sector if these projects foster closer relations between Asia, Latin America and Europe (e.g. telecom and transport), result in environmental improvements, or foster regional integration. The EIB started its operations in ALA in 1993 and has contributed to finance 23 projects in 17 countries.
The EIB was set up in 1958 under the Treaty of Rome to provide loan finance for capital investment furthering European Union (EU) policy objectives, in particular, regional development, European infrastructure, energy, industry and environment. Outside the Union, the EIB contributes to European development co-operation policy in accordance with the terms and conditions laid down in the various agreements linking the Union to some 130 countries in Central and Eastern Europe, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.
The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30 September 1997, when ECU 1 = GBP 0.69, USD 1.113, BRL 1.21337.