Odebrecht Mulls Road Bridge Takeout

Brazilian infrastructure group Odebrecht is looking at ways of taking out part of the financing for the BRL3bn Dom Pedro I brownfield road project in the state of Sao Paulo, including a possible cross-border BRL-denominated bond. Odebrecht last month closed a BRL1bn 18-month fully non-recourse project financing for the road through Santander, Banco do Brazil, Banco do Nordeste, HSBC and Banco Votorantim. It priced at CDI+5%. To refinance the BRL1bn, the issuer is assessing a long-term loan from BNDES, and also talking to the IDB, though it is reluctant to borrow in dollars amid concern about lack of liquidity at the long end of the swap curve, and the need to hedge refinancing risk. Odebrecht is also considering local debentures, or if the market is there, international bonds. “It would have to be in reais,” Felipe Jens, head of infrastructure and project finance at Odebrecht, tells LatinFinance, referring to the denomination of a potential issue. He adds that Odebrecht would be looking for a maturity over 10 years and a size around BRL1bn. “We have to see what price, more than anything else,” adds Jens. However, Sao Paulo-based bankers say that such a trade would be very challenging for a corporate in local currency, a deal that has only ever been done cross-border by the sovereign. Jens says that Odebrecht is in no hurry to issue, and will not do anything this year. The issuer is looking to accumulate records for operational cashflow to bolster its case for financing the 30-year Dom Pedro tollroad concession. Odebrecht has no need to raise more funds this year, based on the current level of investment.