IDB closes $430 million syndicated loan to Brazil’s Embraport project

IDB.Nov 25, 2011. WestLB, HSBC, Caixa Geral, Santander join IDB’s A/B Loan Program to finance a project that is critical to help ease congestion at Santos port.The Inter-American Development Bank (IDB) closed a $430 million syndicated loan with a group of four international commercial participants to finance the construction, operation and maintenance of a new private mixed-use container and liquids terminal in Brazil’s Santos Port, the largest port complex in the region.

The loan was granted to Empresa Brasileira de Terminais Portuários S.A. (Embraport), responsible for the project, which is critical in easing congestion and reducing costs in Santos. The transaction involves a 15-year $100 million IDB A loan and a 12-year IDB B loan of $330 million from WestLB, Caixa Geral de Depositos, HSBC and Banco Santander.

In parallel, Caixa Economica Federal of Brazil has also approved separate financing for the project totaling R$633 million, funded by BNDES, which alongside the IDB financing, will make up the $786 million (equivalent) global senior debt package.

“This operation sets an important milestone for the IDB and Brazil because we see it as an aggressive step towards supporting more private investment in the port sector. In this difficult credit environment, the IDB plans to do more to support Brazilian infrastructure, both through our own balance sheet as well as through attracting participants and co-financiers,’’ said John Graham, the project team leader at the IDB’s Structured and Corporate Finance Department.

The loans from the IDB and CEF/BNDES will finance the first phase of the new terminal, which will have an expected capacity of more than 1 million TEU (a measure that refers to number of 20-foot containers that the facility can handle per year) and will be able to handle liquid bulk. The project will improve the port’s capabilities to receive a new generation of deeper-draft container ships, which have already become commonplace in the global shipping market, helping reduce waiting lines outside the port.

The new terminal will also contribute to improved traffic conditions in the city because it will have adequate road and rail connections, and will be located away from the congested urban area of Santos itself. The new terminal will create approximately 1,500 direct jobs during construction as well as 550 employees at the outset of the operation and 1,500 at full capacity.

About the IDB's Structured and Corporate Finance Department
The Structured and Corporate Finance Department (SCF) leads all IDB's non-sovereign guaranteed operations for large-scale projects, as well as those linked to companies and financial institutions. Through its Loan Syndication Program, SCF acts as a catalyst, helping to engage third-party resources by partnering with commercial banks, institutional investors, co-guarantors and other co-lenders for projects with high developmental impact.

Review of Maritime Transport 2011

Geneva, 23 November 2011. UNCTAD/PRESS/PR/2011/051. The globalization of maritime businesses allows shipping companies to source from the most cost-efficient suppliers. This has led to the reduction of international transport costs, which directly benefits global merchandise trade, according to the latest UNCTAD Review of Maritime Transport.

Maritime transport saw an increase in demand in 2010, in particular in the dry bulk and container trade segments. Total seaborne trade reached an estimated 8.4 billion tons.

On the supply side, 2010 saw record deliveries of new tonnage, 28 per cent higher than in 2009, resulting in an 8.6 per cent growth in the world merchant fleet. The fleet reached almost 1.4 billion deadweight tons (DWT), in January of 2011, an increase of 120 million of DWT over 2010. New deliveries stood at 150 million DWT, against demolitions and other withdrawals from a market of approximately 30 million DWT.

Developing countries have made remarkable progress in international seaborne transport -- as documented for more than 40 years by UNCTAD´s annual Review of Maritime Transport (RMT). Developing countries´ shipping no longer consists solely of raw materials exports to the developed world. Indeed the last decades have seen their increased participation in global supply chains, which led to a surge in imports of primary and intermediary products.

Between 1970 and 2010, developing countries´ share in the volume of seaborne imports rose from just 18 per cent to 56 per cent of the world´s total. The world´s busiest container ports are Shanghai, Hong Kong (China) and Singapore, and Asian developing countries have the highest indicators of maritime transport connectivity, as captured by UNCTAD´s Liner Shipping Connectivity Index (LSCI).

But while the consolidation of the services provided by the container shipping industry achieved improved operational efficiency, it may also have entailed a loss in negotiating power for some players and resulted in less overall market efficiency for smaller trading nations. In July 2011, UNCTAD found that 35 coastal countries were served by three or fewer liner companies, compared to 25 countries just five years earlier.

The Report also highlights the entry into force, in September of 2011, of the International Convention on Arrest of Ships which was developed under the auspices of UNCTAD, during the United Nations International Maritime Organisation (IMO) high-level conference in 1999.

In the past decades, developing countries have substantially expanded their fields of expertise to maritime sectors of greater business sophistication and technical complexity. They first became major market players in the provision of seafarers and vessel registration, and are now expanding into practically all major maritime sectors.

As highlighted in this year´s special chapter of the UNCTAD Review of Maritime Transport, developing countries are not only users of shipping services but increasingly participants in the provision of these services, through the operation of seaports, the construction of ships, containers, and in the transport of equipment.

In shipbuilding (China and the Republic of Korea), scrapping (Bangladesh), and the provision of seafarers (Philippines), developing countries now account for more than three quarters of the world´s supply. Companies from Dubai, Hong Kong (China), and Singapore operate container terminals in many ports of the world, both in developing and in developed countries.

However, many least developed countries (LDCs) still do not have the ability to participate fully in the maritime businesses, which increasingly requires advanced technological capacities and the existence of industrial or service clusters. These countries are confronted with the double challenge of having to upgrade seaport facilities to accommodate larger ships while seeing competition being reduced with fewer regular shipping services calling at their ports.

Shipping companies from developed and developing countries alike increasingly rely on goods and services from developing countries to remain competitive. Already in the 1970s, ship-owners made use of open registries, enabling them to hire crews from countries with lower labour costs. In more recent decades, shipping companies also started purchasing their vessels in shipyards from developing countries, as vessels constructed in European or United States shipyards would often be too expensive.