Japan Bank for International Cooperation (JBIC) has signed a guarantee agreement with a syndicate of underwriters for the extension of a commercially syndicated loan totalling US$135mn to Banco do Brasil. This syndicated loan, arranged by Japanese private financial institutions Sumitomo Mitsui Banking Corporation (agent bank), ABN Amro Tokyo branch, BNP Paribas Tokyo branch, Mizuho Corporate Bank, and UFJ Bank, finances, via Banco do Brasil, the steel mill rehabilitation project executed by Companhia Siderurgica Paulista, which is a subsidiary of the major Brazilian steel company Usiminas.
The project is aimed at upgrading and rehabilitating the steel mill’s aging equipment, including the coke oven, blast furnace and converter, to increase crude steel production. Producing nearly 15% of Brazil’s total crude steel output, Companhia Siderurgica Paulista boasts an approximate 20% share of steel products used for automobile/automobile parts marketed in the country.
There are more than 200 Japanese companies operating in Brazil, and they procure steel materials from local steel companies. Major Japanese automakers such as Toyota, Nissan and Honda are no exception and they also rely on local steel makers for the majority of their steel products, which are necessary for automobile manufacturing and sales in Brazil. This project will help boost the quantity, as well as improve the quality, of steel products supplied to Japanese car makers.
As the economic situation has become more stable in Brazil, Japanese private financial institutions are taking greater interest in the country’s business expansion. JBIC’s guarantee facility is expected to provide indirect support for their financial activities in the global market. At the same time, the guarantee facility will contribute to the securing of long-term funds for Brazil as well.