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Sao Paulo, Brazil, October 27, 2011
—IFC, a member of the World Bank Group, is providing an innovative $50 million partial credit guarantee to a longstanding IFC client, Construtora Norberto Odebrecht S.A., to support the development of infrastructure in Brazil and other Latin American countries.
Across the region, demand for infrastructure investment and construction has grown significantly, but the availability of surety bond insurance has not kept up. In response, IFC has designed an innovative partial-credit-guarantee facility under which the $50 million guarantee will allow Construtora Norberto Odebrecht S.A.to obtain up to $250 million in surety bonds, directly supporting up to $2 billion in construction contracts in such sectors as power, water, roads, ports, airports, and irrigation.
Surety bonds are provided by insurers to guarantee the performance of contractors. These bonds are considered more efficient than other performance guarantees because they are less expensive, do not require using the limited lending capacity of commercial banks, and increase the likelihood of contract completion. However, these bonds are less readily available in emerging-market countries.
Marcos Lima, who heads Odebrecht’s captive risk management, insurance, and surety bonds unit, said, “IFC’s guarantee is in line with our long-term surety bond strategy of supplementing our capacity needs in markets outside of the traditional insurance market. We expect to replicate this novel financial structure with IFC and other institutions in the future so as to further leverage capacity with our global surety partners.”
Atul Mehta, IFC Director, Manufacturing, Agribusiness and Services, said, “Infrastructure development is one of the most important challenges for sustained growth. It creates major employment and training opportunities for the base of the pyramid and for small and medium enterprises. IFC is pleased to pilot this new financial product which addresses a key constraint and hopes to offer it in other markets.”
In Brazil, IFC’s strategy focuses on promoting access to finance and developing capital markets to reach low-income individuals, microenterprises, and small businesses. IFC seeks to strengthen infrastructure and public services, including health and education, by increasing private sector participation. Other key areas include improving the investment climate and helping small businesses join the formal economy. IFC also promotes socially and environmentally sustainable practices, specifically in the Amazon region.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion. For more information, visit
www.ifc.org
About Construtora Norberto Odebrecht S.A
Construtora Norberto Odebrecht S.A is Latin America’s leading engineering, procurement, and construction services company. As one of the largest global contractors in the world, it focuses on the construction of major infrastructure projects with operations in the Americas, Africa, and Europe. It is a subsidiary of Odebrecht S.A., the non-operating holding company of the Odebrecht Group. For more information, visit
http://www.odebrecht.com
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