Brazil set about privatizing its largest airports back in 2011 – and since then, the program has seen the vast majority of the country’s airports successfully transitioned to private control.
More recently, that includes two of the country’s largest airport groups: a cluster of 15 airports in the south and central regions of Brazil, the 30-year concessions for which were won in a 2021 auction by domestic transportation conglomerate CCR Group.
As significant was the R$4.65 billion transaction to refinance the acquisition loan for the concessions in what ended up being a landmark deal last year in the Brazilian marketplace – not to mention for the sector as a whole.
The sizeable project financing, which wins Airport Financing of the Year, employed both local capital markets and national development bank financing in a deal which not only showcased the financial strength of the sponsor, but also underscored a new approach BNDES has adopted to promote the involvement capital markets in the country’s infrastructure sector.
At first blush, the transaction, which closed last October, might appear like a traditional BNDES-structured deal, with the development bank providing the financing to CRR on a 24-year term. But it was structured in a way that both protects CCR’s balance sheet while enabling BNDES to sell the debt in capital markets whenever appropriate, notes Waldo Perez, VP of Financial and Investor Relations Officer at CCR.
“We wanted to maintain a robust financial capability, so that we can keep on looking for growth opportunities,” he says.
Together, the two concessions bring together 15 airports, spread across Brazil southern and central regions. They were won in a public tender three years ago, when the acquisition costs were funded via a bridge loan. The new financial package sought to repay the loan and finance capex investment over the long term.
The deal was structured as a limited-recourse project financing, involving two issuances of 24-year debentures, totalling around R$4 billion. One issuance was made by each of the concessions individually; following further negotiations, BNDES decided to purchase the debentures in their entirety, thereby allowing for the kind of long-term maturity that remains a rarity for Brazilian debentures.
“We would have easily been able to place the debentures directly in the capital markets if we were looking at 12 years,” Perez points out.
The deal also included R$650 million in other credits granted by BNDES, including a backstop loan that can be cashed if necessary. To close the deal, CCR made available customized guarantees for each of the concessions based on future revenues and other projections.
The fact that BNDES bought the debentures and can eventually resell them in secondary markets to raise cash for future projects underscores the bank’s willingness to push for capital markets to play a bigger role in financing infrastructure projects in Brazil, Perez says.
“By enabling the structuring of such a long-term deal, BNDES makes it easier for the market to develop, and for investors to become more used to this profile of debt,” he says.
CCR Airports & South and Central Blocks
$R4.65 billion Financing
Sponsors: Companhia de Participações em Concessões, CCR Aeroportos S.A., CCR S.A
Lead Arrangers: BNDES, Itaú BBA Lender: BNB
Financial Advisor: Itaú BBA
Borrower’s Counsel: Pinheiro Neto Advogados
Lenders’ Counsel: Machado Meyer
All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email awards@latinfinance.com