BNB gives jump in funding for infrastructure in the Northeast

The Banco do Nordeste's budget with Constitutional Fund do Nordeste (FNE) grew 20% in 2018, to $30 billion. Almost half of this amount is destined to infrastructure projects in the region, such as transportation, sanitation and electricity. Until 2016, the industry didn't have a budget within the Bank and the signings were in the House of R $400 million per year. Between 2012 and 2016, for a Government policy, the BNB was prohibited from lending money to the FNE-whose resources come from the collection of income tax and the tax on industrialized products-for the power sector. At the time, the order was to focus on smaller deals and let the energy projects with the Banco Nacional de Desenvolvimento Econômico e Social (BNDES), says the Corporate Business Manager and Structuring of Bank operations, Sergio Clark. During this period, the Bank released only $ $2.4 billion — 65% of the amount released in the last year of R $3.6 billion. With the approval of the Government to act in all areas of infrastructure and an unbeatable rate on the market, the BNB has accelerated this year, hiring in the sector. From January to June, $6 billion were R-number similar to BNDES loans between January and March to infrastructure. "The market realized the competitive advantage (of rates), which has caused a great demand, particularly among the energy projects," says Clark. He states that, in addition to lower rates, some conditions are also more attractive. A solar energy project, for example, the Bank is financing up to 100% of the share of local content; at BNDES, explains, the loan is up to 80% of that amount. Initially the search for financing came from wind and solar generation projects, but now also has attracted investors from transmission lines. Experts in structuring financings in the last auction of transmission lines carried out by the national electricity Agency (Aneel), in São Paulo, almost all lots located in Northeast hard-coded in the plans of BNB rates. Competition. According to sources, the move inconvenienced the BNDES, which has tried to improve the conditions of your offer in the region. Despite the dispute between the two banks, the financial power of the BNDES is greater. The BNB budget represents a third of the total disbursements made by the BNDES last year. In a statement, the Superintendent of the Bank's energy area, Carla Spring, said the BNDES is the most relevant long-term financier of the country and that the BNB has appeal "with subsidized rates FNE constitutional to promote investment in the Northeast" and Therefore it is lawful to capture by entrepreneurs in the sector. In addition, she asserts that the need for investments in infrastructure will be of the order of Rs $500 billion by 2021. "The energy sector will require R $160 billion in the same period. Consequently, there is a need for multiple funding options. " The partner of the firm Mattos Filho and specialist in infrastructure and Project Finance, Pablo Sorj, agrees that the country needs multiple sources of funding and, therefore, the two State-owned banks should not compete with each other. In addition, he defends the incentive to capital markets. Capacity. The market's concern, though, is that this "firepower" Banco do Nordeste is perennial and not end up harming who planned to finance the institution. In addition, there are doubts about the operational and financial capacity to meet the demand. Only in wind generation, the new parks – most of them in the Northeast – will need R $8 billion per year of funding. And transmission ventures in the region, auctioned off at the end of last month by Aneel, R $2.8 billion. The Bank ensures that can approve a mortgage within 112 days average. Sources heard by the State claim that, in fact, the approval is fast. The problem is the release of the money. At BNDES, they say, the situation is reversed. Takes too long to approve, but the resources come out soon. With the changing of the LTIR for TLP, BNDES lost competitiveness, say executives credit for infrastructure. Since last year, several investors sought other alternatives to escape higher rates of banco de fomento. Some funded entire projects with the issuance of debentures, but, with the new rates of BNB, until the capital market has been deprecated by the investors. For now, although there are limitation of R $1.7 billion per group, there is still room for new financing. NBB can fund, with funds from FNE, projects in the Northeast and North of the States of Minas Gerais and Espírito Santo. Where is the money coming from constitutional Funds the resources that make up the constitutional funds corresponding to 3% of the collection of income tax (IR) and the tax on industrialized products (IPI). The money is transferred to the funds by the National Treasury. Bottom of the Nordeste (FNE) Of 3% of the collection and IPI, the FNE is with 1.8%; the bottom of the Center-West (FCO), with 0.6%; and the bottom of the North (FNO), with 0.6%. In addition, the budget is composed of resources not used in previous years and also for payment of loans already made. The FNE is administered by Banco do Nordeste. The Fund finances productive activities in the Northeast region and North of the States of Minas Gerais and Espírito Santo. The funding limitations of the BNB Northeast, with funds from FNE, are limited to R $1.7 bi for financial group. In 2018, the Bank's budget is R $30 and R $14.5 bi bi infrastructure. Signings in the first half of this year, the Bank hired some R $12.5 billion. Of this total, R $6 bi were to the infrastructure sector. Between January and March, the BNDES approved R $6 bi industry financing.