A high-level delegation from the European Investment Bank (EIB) will be visiting Brazil during the coming week to discuss ways to broaden the Bank’s activity in this country. The EIB delegation will meet with Brazilian authorities at both federal and state level and with the national development Bank, BNDES, to identify and discuss new financing opportunities, with a particular focus on environmental sustainability and economic development.
“EIB projects in Brazil have traditionally supported foreign direct investment and the transfer of technology and know-how from the EU”, said Jean-Louis Biancarelli, Director General for lending operations outside Europe and head of the EIB delegation. “In line with our current mandate, we are willing to broaden this activity by supporting the transfer of EU expertise and leadership in key sectors such as telecommunications, industry and high-speed trains, as well as by contributing to global climate change mitigation efforts”, he added.
Brazil is the main Latin American beneficiary country of EIB loans for investment in productive activities and the largest recipient of EU foreign direct investment in the region. The EIB has so far extended 24 loans totalling EUR 1.4 billion, representing some 48% of its entire activity in Latin America. The diversified portfolio of EIB financing operations in Brazil directly supports private sector investment. Among the main investments supported are those of Vivo, Continental, Michelin, Pirelli, TIM, Telefónica, Itaú-BBA, Volkswagen, Mercedes and Veracel, as well as the Bolivia-Brazil gas pipeline.
Under its current mandate, covering the period 2007-2013, the EIB has been asked by the EU Council to lend up to EUR 2.8 billion in Latin America for financing operations supporting EU cooperation strategies and complementing other EU development and cooperation programmes and instruments in the region. An additional EUR 3.0 billion is available for financing energy security and sustainability projects in investment-grade countries, including those in Latin America, over the same period.
In Brazil, the EIB offers medium and long-term loans (no equity instruments at present). EIB loans are project-linked, with the emphasis on financing the long-term components of an investment. Typical direct loans range between USD 50 million and USD 200 million. For smaller projects the EIB can lend indirectly through credit lines extended to local financial institutions or commercial banks for allocations between EUR 0.5 and EUR 12.5 million.
Background
The EIB is the European Union’s long-term financing institution. In 2007, the EIB provided loans totalling some EUR 48 billion. The Bank borrows the funds for its lending on the capital markets. Its bonds have regularly been rated "AAA" by the leading rating agencies. The EIB is able to pass on to project promoters the excellent terms it obtains on the markets. The EIB may finance up to 50 per cent of a project’s cost. On average it provides one third of the funding and co-finances investments with other institutions.