With its regionwide presence, a leadership position in several key markets and a strong portfolio of projects financed in a difficult market, Banco Santander is 2023's Infrastructure Bank of the Year in Latin America.
The Spanish banking group made its mark in several award-winning deals of the past year, including a blue bond for Brazil’s BRK Ambiental (Sustainable Infrastructure Financing Deal of the Year) and the refinancing of the Via 40 toll road concession in Colombia (Infrastructure Financing Deal of the Year in the Andes).
Santander also played an important role in two mega-deals that closed in Brazil during award period. It was lead arranger and provided a letter of credit linked to the 6.9 billion reais loan granted to the concession that is building the Line 6 of the São Paulo metro system, which wins Infrastructure Deal of the Year in Brazil. It also provided a letter of credit to the 3.94 billion reais BNDES loan granted to GNA II to build a gas-fired combined cycle power plant in the Rio de Janeiro state, our Power Financing Deal of the Year.
According to Benoit Félix, global head of structured finance at Banco Santander, the award reflects the bank’s increased level of activity across infrastructure sectors over the past couple of years, despite the difficult stretch for Latin American markets. He says the challenging environment has led Santander to lean into its financial advisory capabilities.
“In a world that is ever more complex, the advisory side of our business becomes ever more important,” Félix says. “We have to offer advice not only about the financial structure for a project, but also about the best timing and the new kinds of instruments that are playing an ever more important role.”
A complex market also demands creative solutions, such as the hybrid structure employed to refinance Via 40 or renewable energy projects with power purchase agreements denominated in dollars, as seen in Brazil. And even though the business environment was particularly hard for the infrastructure sector at the end of 2022 and early 2023, Félix has seen signs of improvements in some of the region’s most important economies.
“There is much expectation in Mexico. We are seeing many players becoming active again, both among sponsors and lenders,” he says. “In Brazil, we remain very active in the renewable energy market. We are leaders in advisory in this segment and right now we have 40 live mandates there.” He notes that Brazil is also betting on green hydrogen, which he says is “good news.”
“We are having plenty of talks with the federal authorities and local governments about it.”
Félix also notes that Chile has recovered some of its activity, but the prevalence of Chinese companies as sponsors and the lack of liquidity in local currency creates issues for projects.
“It is a challenge to structure project finance in Chile right now, but there is an important volume of investments on the way. There are many hospitals, bridges and roads to be funded, and also renewable energy and desalination projects,” Félix says. “Banks will have to find a solution for their funding, but it remains a competitive market in Chile.”
He has also seen solid activity in Colombia over the past couple of years, while in Peru, projects are starting to move again. Investors with a Latin American infrastructure mandate can still find some attractive alternatives in the region, Félix says.
“International liquidity was gone last year as interest rates went up, but it is now coming back into the market,” he says. “What is a fact, though, is that, even though the pipeline of projects right now is not huge, what is out there can be placed without much of a problem.”