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US$115 million A/B loan will expand access to financing primarily for renewable energy

The Commerzbank, Inter-American Development Bank (IDB) and Banco Pine S.A. closed a US$115 million syndicated A/B loan to expand access to financing for environmentally sustainable projects in Brazil. The Green Line Finance Partnership entails a US$75 million a loan from the IDB and US$40 million B loan from Commerzbank.

With the demand for energy for both domestic and industrial purposes expected to expand 60 percent by 2021, Brazil’s energy matrix will likely shift toward a higher concentration of renewable energies, most notably energy from sugar cane derivatives and other renewables such as wind energy, small hydroelectric plants and biomass.

COMMERZBANK, IDB CLOSE GREEN LINE FOR BANCO PINE IN BRAZIL 1The Green Line Finance Partnership with Banco Pine will increase access to adequate financing for transactions, particularly in renewable energy sectors that promote environmentally sustainable initiatives and reduce the impact on climate change in Brazil.

“Throughout Latin America and the Caribbean, financial institutions fulfil an essential role in lifting green growth projects off the ground by facilitating their access to financing options,” said Marcelo Paz, project lead for the IDB. “The IDB looks for like-minded partners in banking that seek to combine financial profitability with environmental returns. Banco Pine and Commerzbank were the right fit in Brazil.”

Long-term funding to support capital expenditure lending is a challenge. That’s why many Brazilian banks are looking for a systematic approach to differentiate financing according to their environmental benefits and improve deal sourcing.

“As a global partner for financial institutions in foreign trade and financing we aim at adding value to our product offer by supporting renewable energy projects across Latin America” says Thomas Krieger, Regional Head Latin America of Commerzbank. “It is our priority to look for partners like the IDB that invest in a broader range of sustainability and development financing programs. Commerzbank hopes to join forces with the IDB on similar deals in the future.” This is the second green loan deal that Commerzbank has completed with the IDB. In May 2013, for the first time the two banks partnered to finance a green facility in Brazil, demonstrating commitment to sustainable banking practices in the region.

“Having long-term financing options to support our clients’ renewable energy projects is essential,” said Norberto Zaiet Junior, Pine’s COO. “Through our partnership with the IDB, we hope to provide our clients with one more financial product to grow their businesses.”

In addition to long-term financing, the IDB is providing Banco Pine with two capacity building tools for its E&S Team: Green Line Eligibility Criteria, Biofuels Sustainability Scorecard to help relationship managers and credit risk analysts improve deal sourcing and efficiently expand the use of the green line.