CRT breaks ground for Brazil infrastructure

Rob Dwyer
Published on:

It was second time lucky for the first Brazilian toll-road financing to come to the market without the support of BNDES. The initial attempt ended in confusion. A year later, the revived deal under new leadership faced severe headwinds.

On the first evening of their international roadshow, Rodovias do Tietê’s CFO, Ricardo Oliveira, and its controller, Thiago Jordão, were in Chile’s capital, Santiago. The first day had gone well and hopes were high that the following two weeks would generate substantial international orders for the first project-finance structured debenture issued in the Brazilian capital markets.

Then, on June 4, they were told that the Brazilian government had announced that it was scrapping the IOF tax that required international investors to pay 6% to buy Brazilian debentures. In an instant that stripped away one of the most attractive elements of the deal for non-Brazilian investors: this deal qualified under Lei 12431, a relatively new piece of legislation (a final amended version was passed into law in November 2012) that provides tax exemptions for international investors and individual domestic investors.

The law was introduced...