The financing for a 20-year concession to modernize, expand and operate Brazil and Latin America’s biggest airport sets an important model for infrastructure concessions in Brazil, particularly for transport.
Guarulhos, near São Paulo, is the first and biggest of three key airport concessions granted to private sector consortia in Brazil since 2012: the others being Galeão, in Rio de Janeiro, and Confins, in Minas Gerais.
The Guarulhos financing’s biggest element was a long-term, non-recourse bank loan closed in December 2013. This comprised a 14-year, 2.44 billion real ($1.06 billion) loan from national development bank BNDES, and a 14-year, 1.04 billion real financing from Banco do Brasil, Bradesco, Caixa Econômica Federal, HSBC and Itaú.
The airport followed the bank financing with a 300 million real ($135m) 12-year debenture, in March, marking one of the first times infrastructure debentures have been used in Brazil. The project plans to issue a second 300 million real debenture in the second half of 2014.
Financing such an important project on a multi-source, non-recourse basis sent a positive signal about the possibilities in Brazil’s infrastructure financing market, says Marcos Rocha, chief financial officer of Brazilian transport infrastructure specialist Invepar, one of the project’s sponsors.
“Either we are able to develop structures on a non-recourse basis, or there will be a strong limitation in the number of projects that each sponsor can handle,” he says. “This benchmark has been replicated by other players, and we ourselves are replicating this structure in other businesses.”
The combination of non-recourse, long-term bank financing, including BNDES, five commercial banks, and project bond issuance — all sharing collateral on a pari-passu basis — is the biggest innovation of the deal, says Rocha.
The concession for Guarulhos was awarded in February 2012 to a consortium of Invepar and ACSA, a South African government-owned airport operator. Previously, Brazilian government-owned airport firm Infraero operated the airport. Infraero has a 49% stake in the concession.
The first phase of the financing was a $1.2 billion bridge loan granted in October 2012 with an 18-month term. The 14-year loan and the first debenture sale, which together win the award, replaced the bridge loan.
The collateral provided to the lenders is made up of an equity support agreement, which guarantees payments for the concession fees due to the government. Airport revenues also go into a waterfall payment system, to cover essential costs.
Law firms Lefosse and Pinheiro Neto advised the sponsors, while Machado Meyer and White & Case advised the banks. LF
WINNER: GUARULHOS INTERNATIONAL AIRPORT