The European Investment Bank (EIB) is lending USD 60 million to Celular CRT S.A. to modernise and expand a cellular phone network in the Southern Brazilian Southern State of Rio Grande do Sul. This is the first EIB loan in support of an investment project in the telecommunications sector in Brazil.

Celular CRT S.A. is a private sector company managed and operated by Telefónica Internacional S.A.. It is owned controlled by a group of European companies including Telefóonica Internacional SAof Spain, Portugal Telecom, Iberdrola and BBV. Celular CRT is managed and operated by TelefonicaThe project will contribute further to the economic development of the State of Rio Grande do Sul, in the context of performance and employment and helps to implement the Brazil'sian privatisation and liberalisation policies.

Celular CRT S.A. provides services to more than 850.000 customers. It covers more than 95% of the urban population, as well as the main roads, of the State of Rio Grande do Sul. In the period 1997- 2001 Celular CRT S.A. is to invest over USD 500 million. In 1999 capital expenditures are expected to total more than USD 165 million.

The 8-year EIB loan provides for bullet repayment in by the end of December 2007. The USD-denominated loan will carry a floating interest rate, capped at LIBOR + 15 basis points. A group of banks, which includes Banco Bilbao Vizcaya, Argentaria, Banco Santander Central Hispano, and Westdeutsche Landesbank Girozentrale, guarantees , on a roll-over basis,the non-political risks involved in this transaction. Risks of currency non-transfer, expropriation, war and civil disturbance are covered by the European Union (EU) budget guarantee.

The loan is provided in the context of the EU co-operation policy with third countries. In Asia and Latin America (ALA), the EIB may lend up to EUR 900 million during 1997-99 to support private capital investment projects implemented by subsidiaries of EU companies or joint-ventures between EU and ALA firms, or investment that results in environmental improvements or fosters regional integration.The EIB was set up in 1958 to finance investment furthering EU integration. It lends for regional development, infrastructure, energy, industry and environment. Outside the EU, the Bank contributes to the European development co-operation policy in some 130 countries in Central and Eastern Europe, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.In 1998, the EIB provided loans totalling some EUR 29.5 billion, of which EUR 4.4 billion for projects outside the EU. The Bank borrows on the capital markets the funds for its lending. Its bonds have regularly been rated "AAA" by the leading rating agencies. The EIB works on a non-profit basis and can pass on to project promoters the excellent conditions it obtains on the markets. The EIB may finance up to 50 percent of project cost. On average it provides one third of the funding and co-finances investments with other institutions.