Approved US$110 million for Brazil in cofinancing operation

In the first cofinancing operation to attract external funds into a non-Andean country, the Andean Development Corporation (CAF) approved an A/B loan for Brazil for US$110 million to finance the investment plan of the Eletrobras state electric utility, which is combating the power crisis affecting the country.

The CAF executive president, Enrique García, said this operation highlights the work being done by the multilateral institution to assist shareholder countries in times of crisis, in line with its catalytic role in attracting and mobilizing sources of finance on favorable conditions for the region.

The structure of the loan consists of a contribution of US $27.5 million from the CAF for the A tranche, and US$82.5 million for the B tranche financed by a syndicate of banks led by Banco Bilbao Vizcaya Argentaria Securities.

A/B loans are a cofinancing mechanism developed by multilateral organizations to finance development projects jointly with other international financial institutions.

To combat the ongoing national energy crisis, the Brazilian Federal Government implemented an Energy Emergency Program which included approval of an extraordinary borrowing of about US$500 million for the Eletrobras group in addition to the investment budget for electricity generation and transmission projects.

Eletrobras has been a client of the CAF since 1997 when it was granted a direct loan for US$55 million to finance the Venezuela-Brazil energy integration project.