Banco Itau-CL

completed

The bank offers an array of financial services, including retail, commercial, corporate, and private banking. The credit line to be established would be used to finance companies that have viable projects but limited access to term financing. Onlending will be carried out for investments in the areas of sanitation, development of water and sewage services, small power plants including biomass-based energy plants, industrial expansion and environment support. The proposed project is a response to the following:a) Strong demand for, and inadequate availability of, long-term financing for private infrastructure projects.b) Inadequate financial resources for the private sector and exports.Even for the more efficient firms, capital scarcity has been a major constraint to modernize plant and equipment, to expand in order to meet external competition, or take advantage of new opportunities opened by changes in relative prices. Under today’s market conditions - with access alternately closed (when bad news occurs) or open only for top-quality credits- the ability of Brazil’s private sector to borrow externally remains minimal and limited to a few blue chip companies and banks for short maturities at high rates. IFC''s credit line will help provide much-needed long-term financing to Brazilian companies. Furthermore, it will enable IFC to help a relatively large number of Brazilian corporates more efficiently than through direct IFC lending. This project has important benefits for Brazil’s financial and infrastructure sectors--both key in promoting growth. Increased productivity in a globalizing environment is today''s challenge for Brazilian firms, which, historically, have mainly competed against other domestic producers. In this connection, improving the country’s infrastructure is a priority of the government of Brazil, since major bottlenecks are emerging in power, ports, railways, gas, roads, urban transport, and water, due to low investment over many years. Given the weak investor confidence in emerging markets, there is a major capital and financing constraint, and several initiatives have been delayed or put on hold. The proposed credit line will be critical to the country’s rehabilitation and expansion efforts as it continues to recover from the recent difficult environment and as the Brazilian companies brace for competition in globalized markets.