How BNP Paribas is positioning itself in Brazil’s energy sector

Privately owned Brazilian bank BNP Paribas is working on financing operations covering a range of different types of energy sources in the country, from renewables to fossil fuels. 

With local development banks reducing their participation in the market, BNP is already seeing projects that seek 100% of financing from the capital market. 

“There's an avenue of possibilities for operations to test the capital market,” the bank’s head of project finance, Thiago Sendelbach, tells BNamericas.  

In this interview, he talks about the main initiatives that BNP Paribas has underway and the outlook for the local energy sector.

BNamericas: How is BNP Paribas positioning itself in the energy sector, given the reduced participation of development banks?

Sendelbach: Prominently. We were one of the coordinators of the GNA I [thermoelectric power plant, in Açu Port] debenture issue. The bank is fully equipped to carry out more operations of this nature, more aimed at the capital market, in comparison with the previous situation when companies looked more to the development banks. They still have significant participation, but the capital market has been gaining space and we have an outstanding performance in this scenario. 

BNDES and the other development banks in general still have some advantages, such as longer terms. But market operations often have greater efficiency, with a slightly more adjusted debt coverage index and conditions for the release of the guarantee that are more favorable for the issuer. Furthermore, the costs nowadays are comparable. So, if the development banks occasionally offer longer terms, the private banks have some comparative advantages. 

BNamericas: Private banks have played an important role in the completion phase, referring to the construction and start of operations of projects. 

Sendelbach: We have already worked providing guarantees for development banks and infrastructure debentures, which were complementary to the funding from development banks. There were situations in which 70% of the financing was sought from the development banks and 30% from the capital market. Now we're already seeing projects that seek 100% of financing from the capital market, and the bank continues to provide guarantees to support that. 

BNamericas: Can you tell me about any major projects financed by BNP?

Sendelbach: We're working on several operations. Last year we closed one for a transmission line from Terna, an Italian shareholder, with a 25-year term, one of the longest operations ever done in the Brazilian capital market. And we have a series of ongoing discussions, both in infrastructure and in electric energy, including solar and wind. There's an avenue of possibilities for operations to test the capital market. 

BNamericas: Are oil and gas projects also on BNP Paribas’ radar?

Sendelbach: We've been looking closely at the natural gas sector. All energy sources are important, so the combination of renewables, including hydroelectric power, with thermoelectric is what makes a strong matrix, with good complementarity. We have every interest in advising and financing thermoelectric and gas-based projects, leading debenture operations. 

We're also looking very carefully at the oil sector. We recently carried out [offshore production] platform financing operations in Brazil. We have a specific team that takes care of platform deals and shipping. We're also following the divestments of [Petrobras] refineries, supporting the bank's global clients. We've noticed a lot of interest from both local and international players, from North America, Europe and Asia. 

BNamericas: Is the bank considering launching new products and financing modalities?

Sendelbach: We're working with financing in dollars for projects that have some component in foreign currency. I think that the great vector today is market operations for energy and infrastructure projects. Clients have been focusing on that a lot. And the optimization is more in the fine detail, from operation to operation. 

BNamericas: How does the energy crisis affect your plans in energy?

Sendelbach: I think that the need to continue investing in the energy sector it is even clearer, and BNP Paribas, which has been in Brazil since 1995, has always supported this sector, regardless of the economic cycle. The current scenario only reinforces the need for the bank to continue supporting clients in the search for new operations with development banks and capital markets. It's essential to keep investing in order to unblock any bottlenecks that may appear now or in the future.