Brazilian Bank Raises $408 Million for Renewable Energy and Water Projects

The Brazilian bank Itau Unibanco Holding SA raised 1.05 billion reais ($408 million) to finance renewable energy and water treatment projects.

That’s the most ever raised for renewable energy in Latin America by a Brazilian bank, the Sao Paulo-based company said in an e-mailed statement Tuesday. The funding comprises a five-year, 262 million-real loan from International Finance Corp. and a three-year, 787 million-real loan from Bank of America Corp., Mizuho Bank Ltd. and Commerzbank AG.

Banks in Brazil may increase their financing for clean power as President Dilma Rousseff pursues policies to reduce debt and control inflation and the national development bank BNDES pulls back, according to Marcelo Girao, head of energy for project finance at the financial company’s Itau BBA unit.

“BNDES is slowing down in some type of loans, so the development bank has to find alternatives with other banks,” Girao said in an interview in Sao Paulo this month. “Commercial banks will have more exposure to renewable projects, such as wind parks.” Bank of America, for example, has set a goal of $50 billion to green initiatives in the next 10 years, according to the statement.

Brazil’s monetary council, which includes the finance minister and central bank president, raised the so-called TJLP subsidized interest rate to 5.5 percent starting Jan. 1, from 5 percent. The rate is a benchmark for loans provided by BNDES.

Girao estimated that as much as 30 percent of long-term loans approved in the next few years by the development bank, Banco Nacional de Desenvolvimento Economico & Social, will come through private banks, a strategy aimed at “risk diversification.”

Copyright 2015 Bloomberg

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