Infrastructure in Brazil: How Brazil’s BNDES Used Project Finance to Fund the 2014 FIFA World Cup
Brazil’s development bank, the Banco Nacional de Desenvolvimento Económico e Social (BNDES) financed and will be financeing, respectively, the vast majority of the 2014 FIFA stadiums, the 2016 Olympics, and related infrastructure improvements that these mega-events require. These events require not only the upgrade of sporting venues but also support infrastructure projects, including subways, train lines, bus corridors, and road and airport upgrades. With more than $345 billion in total assets as of December 2013, according to its website, BNDES in one of the largest development banks globally and the Brazilian government’s main vehicle for implementing its infrastructure policies. BNDES provided most of the financing for the FIFA World Cup because it offers long term loans with below-market interest rates. As a result, few commercial banks have been involved in the financing projects for either the World Cup or the Olympics.
A recent study from S&P Capital IQ explores how Brazil implemented infrastructure funding through the BNDES, associated programs, and the public-private partnership (PPP) framework in the country. The study was conducted in conjunction with the BNDES and uses Standard & Poor’s rating criteria, as well as the S&P Project Finance Scorecard model based on those, to better understand and analyze BNDES’s role and challenges in financing Public Private Partnership (PPP) projects as part of the World Cup and the Olympics preparations, which will be discussed in this article. S&P Capital IQ also used two BNDES PPP stadium financing projects assessments of credit from the Scorecard as illustrative case studies, which will be explored in a following article.
- Project Finance PPP in Brazil
- Other major sporting event hosts using Project Finance PPP
- Biggest challenges for structuring successful Project Finance PPP projects
- Assessing project credit quality