Amid the crisis brought on by the Covid-19 pandemic, the ingenuity of financial markets was often critical to keeping some of the most affected sectors afloat over the past year.
In Latin America, one of the most impressive examples of this was evident in a landmark financing in Brazil.
The mammoth financing involved a loan of $2.8 billion syndicated among 16 financial institutions, plus development bank BNDES, and distributed to 61 electricity distribution companies. It wins this year’s Loan of the Year in the Project & Infrastructure Finance awards.
The deal needed to be structured with urgency in order to ensure that Brazil’s vital energy distribution system would sail through an expected boom in defaults linked to the pandemic.
The organization that took the lead was CCEE, the electricity market’s clearing chamber, which agreed with the syndicate of banks that the loan would be secured by a fiduciary assignment of credit rights deposited into an account, known as “Conta Covid”.
The loan, which the beneficiaries will pay until 2025, was key to guarantee the stability of the system, in the view of Rui Altieri, chairman of the board at CCEE, and avoided that systemic failures made a bad situation for the Brazilian society even worse.
“Conta Covid was extremely important to establish a scenario of tranquility, as it helped to mitigate the negative impact of the pandemic on the balance sheets of distribution companies,” Altieri tells LatinFinance. “We were able to spread through five years the immediate effects that Covid-19 would have had over the electricity bills paid by all Brazilians.”
Brazilian Electricity Trading Chamber (Câmara de Comercialização de Energia Elétrica – CCEE)
Citibank Brasil, Banco do Brasil, Bradesco, Santander Brasil, Itau Unibanco, BNDES, Banco Votorantim, Safra, Credit Suisse Brasil, SMBC Brasil, BTG Pactual, JPMorgan, ABC Brasil, Bocom Bmb, China Construction Bank, Banco Multiplo, Banco Alfa de Investimento
Pinheiro Guimaraes, Pinheiro Neto, Mattos Filho
All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email email@example.com