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Brazil deal is IFC’s largest port investment

The private investment arm of the World Bank group has helped mobilize $679m in loans to fund a $908m port container terminal in Brazil. The deal is the IFC’s largest port investment and its biggest syndication to date.

The International Finance Corporation (IFC), the private investment arm of the World Bank, has agreed to provide a $97 million long-term loan for a $908 million container terminal project at the Port of Santos, Brazil.

The multilateral has also helped mobilize $582 million in loans for the project through its syndications program, from banks including BNP Paribas, Banco Santander, Credit Agricole, DnB Nor Bank, ING Capital, and KFW Ipex Bank. The syndications program allows commercial banks to lend to IFC-financed projects, granting them “preferred creditor access to foreign exchange in the event of a foreign currency crisis in a particular country,” the IFC states on its website.

The syndication is the IFC’s largest ever, as well as its largest port investment, according to a statement.

Brasil Terminal Portuario, which is jointly owned by Netherlands-based companies Terminal Investment Limited and APM Terminals, will develop and operate the Santos terminal. Santos is the largest port in Latin America, according to the IFC.

The project involves both constructing a new container terminal and cleaning up a landfill at the site.  IFC said Brasil Terminal Portuario will have to spend about $105 million to remediate the landfill.

IFC Senior Investment Officer Rebecca Konrad said that Santos is one of the country’s most congested ports, and that Santos’ overcrowding was one of the “key infrastructure constraints” facing Brazil.

“There is very strong demand. There are ships waiting outside the port, waiting to be serviced,” Konrad said.

The current wait at Santos can sometimes last for days. The delays, which can be costly, have also made some shippers skirt Santos on their routes, according to Konrad. She said the increased capacity at Santos “will allow them to run more efficiently, and it will help the shipping lines on the rest of their routes”.

In related news, the US Export-Import Bank has also committed $1 billion in export credit to the State of Rio de Janeiro for infrastructure projects. The financing will support the purchase of goods and services from US exporters that can be used for various infrastructure projects, according to a statement.

Fred Hochberg, the president of the Export-Import Bank, announced the loan last weekend during a trip to Brazil.

The Export-Import Bank’s commitment was applauded by both US President Barack Obama and Brazilian President Dilma Rousseff during Obama’s visit to the country last week, according to a statement from the White House.

The Export-Import Bank’s commitment will support flood relief and preparations for the 2016 Olympics and the 2014 World Cup, which Brazil will be hosting. The facility can be converted to loan, guarantee or insurance transactions, according to the statement, “as Rio State finds potential U.S. exporters for its infrastructure projects”.