Funds will be used to carry out different project phases in a sector where demand will be strong in the coming years
Financing costs could be reduced if social and environmental impact targets are met
São Paulo, 21 July 2020 – PRESS RELEASE
Santander Brazil will earmark at least R$5 billion to carry out initiatives in the country's basic sanitation sector, the legal framework for which was approved last week. The funds could be used for different phases of water supply projects, collection and treatment of sewerage and rainwater draining, in addition to the management and disposal of solid waste.
The facility will be used for short- and long-term projects (up to 16 years), and costs may be reduced if certain ESG (environmental, social and governance) targets are met. These will be previously agreed and linked to indicators such as the number of people covered by the services, process efficiency, the volume of water and sewerage treated, and the improvements achieved in the health of the population.
The loan terms will depend on the nature of the projects and the purpose for which the funds are used. They may be extended, for instance, in the form of bridge loans (advancing amounts over the long term until the funds are released), used for liability management (cash-flow management for companies during project execution), financing acquisitions (in the case of privatisations) or to cover operating expenses.
"Guaranteed basic sanitation will improve the health and quality of life of millions of Brazilians. Therefore, we are moving swiftly to release the funds available, which can be used in strategic project phases. We are also looking into extending this facility, if demand requires further contributions", stated Jean Pierre Dupui, executive vicechairman of Santander. "We have also committed to waiving
part of the spread on the deals if ESG targets are met. In other words, companies will have an incentive to increase the social and environmental impact of the projects."
The credit facility was placed on the market following the approval of Brazil's new basic sanitation framework, which expects to expand the water and sewerage system to the whole country before the end of 2033. According to SNIS (the Brazilian sanitation information system), around 100 million people in the country still have no sewerage collection system in their homes.
Santander's business strategy has included the 17 United Nations SDGs (sustainable development goals), aimed at fostering sustainable development until 2030. The investment in sanitation is aligned with SDG 6 "Ensure access to water and sanitation for all".
In 2019, for the seventh consecutive year, Santander Brazil led the Anbima ranking for financial consulting on infrastructure and energy projects, taking part in 34% of projects recorded in the year. The bank currently has over 50 consulting agreements in place in the areas of power generation, logistics and transport, transmission lines and social infrastructure, almost half of which relate to renewable energy projects.