PROJECT FINANCE: Brazilian airports open financing crack for banks

The successful start to Brazil’s ground-breaking airport privatization process has been marred for commercial banks by limited opportunities. More bank funding could be drawn in because the BNDES looks stretched, interest rates are falling, and the auction process may be rethought. Meanwhile, airport financing models that do use commercial banks and capital markets are slowly developing in other Latin countries.


The Brazilian airport privatizations may have been a commercial damp squib for commercial banks, but did prove the country’s popularity with operators. There was a fiercely competitive bidding process, proving that investors are still focused on the Latin giant despite a slowdown in GDP growth to just 2.7% last year and the global economic crisis.

Indeed, Brazil continues to account for one third of all foreign direct investment in the region, attracting a record $66.7 billion in 2011, up from $48.5 billion the previous year. Infrastructure is one of the areas of the country most prized by foreign investors, believes Luiz Claudio, a partner in the project finance area of Ernst & Young Terco in Rio de Janeiro. In the airport sector, Brazil’s traffic base is growing quickly and has expanded more than 100% per year over the last decade, a Fitch report published in February found.

This is the start of an article on Brazilian airport privatizations. To read the rest, please go to Project Finance magazine website (

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