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The International Finance Corporation (IFC), the private sector arm of the World Bank Group, today signed an agreement to provide a US$180mn long-term financing package to Empresa Brasileira de Aeron‘ utica (Embraer).

The financing consists of a US$35mn loan for IFC’s own account and a syndicated loan of US$145mn. IFC’s financing will partially fund the end-stage launch programme for the new Embraer 170/190 family of aircraft.

Embraer, one of the world’s largest aviation manufacturers, is listed publicly on the Bovespa (Sao Paulo exchange) and the New York Stock Exchange.

Over the past 10 years, the success of the company’s ERJ 145 programme of 50-passenger commercial jets has enabled Embraer to consolidate its position. The development and launch of its new 170/190 jet family represent a strategic extension of its product line into the 70-115 seat segment of the commercial airplane market. With a range of 3,889km, the aircraft is capable of operations on such routes as Paris to Moscow, Brasilia to Caracas, and Hong Kong to New Delhi.

This financing will provide Embraer with a new, reliable source of funding while addressing the need for long-term finance in a capital-intensive industry, where the cycle from initial market research to research and development to full-scale production is about 10 years, longer than in almost any other industry.

The syndicated loan portion was originally for US$100mn but was significantly oversubscribed during syndication and increased to US$145mn. Funds are being provided by a number of banks, including BBVA, BSCH, ABN AmroO, JPMorgan, Societe Generale, ING, Banco Itau Europa, Caixa Geral de Depositos, Natexis, and HVB.