EDC provides USD 200 M surety bond reinsurance facility to Brazil's Odebrecht Group
SAO PAULO, Brazil, May 27, 2013 /CNW/ - Export Development Canada ("EDC") today announced it is providing an innovative USD 200 million surety bond reinsurance facility for global operations of the Odebrecht S.A. group of companies ("Odebrecht").
The facility was established based on the historical business relationship between Odebrecht and the many Canadian companies that are part of its supply chain, as well as the joint venture partnerships formed between Odebrecht and Canadian companies for the development of international infrastructure projects.
"EDC's facility is in-line with our long-term surety bond strategy of supplementing our capacity needs in markets outside of the traditional insurance and reinsurance industries," said Luis Barretto, Co-Responsible for Odebrecht's captive risk management, insurance, and surety bonds unit. "In this case, we also have the important value-add of further strengthening Odebrecht's relationship with a top-class Canadian insurer such as Fairfax."
An important aspect of EDC's facility is that it can be applied not only to insurance or reinsurance companies that are providing capacity on surety bonds issued for Odebrecht, but it can also be deployed to banks that issue performance guarantees in markets where the group cannot use the surety bond product for regulatory reasons. This transaction marks the first time that EDC has used this kind of structure.
"Odebrecht is a key player in Latin American infrastructure, and this facility provides them with increased bonding capacity that makes it easier for them to secure and manage their contracts more efficiently," said Jean Cardyn, Regional Vice-President, South America, EDC. "As a partner, EDC's presence also helps strengthen and deepen Odebrecht's relationships with Canadian suppliers, both those within its current supply chain and those looking to work with this Brazilian multinational."
Under the terms of the facility, 25 per cent of the capacity of the facility (USD 50 million) will be deployed from EDC to cover surety bonds issued by Fairfax Brasil Seguros Corporativos S.A.("Fairfax Brazil"), the Brazilian insurance subsidiary of the Canadian company Fairfax Financial Holdings Limited. As a result, Fairfax Brazil will increase its surety bond credit capacity with Odebrecht and its business volume with the group.
The first company within the group that will benefit from the facility will be Construtora Norberto Odebrecht S.A., Odebrecht's leading Latin America contractor and a large buyer of surety bonds for its worldwide infrastructure projects.
The increasing demand for surety bonds creates a significant opportunity for new capacity providers outside of the traditional insurance and reinsurance markets, such as multilaterals and export credit agencies like EDC.
About Odebrecht S.A
Odebrecht is a global organization of Brazilian origin consisting of diversified businesses such as Engineering & Construction, Chemical & Petrochemical, Bioenergy, Transportation & Logistics, Oil & Gas, Defense & Technology, Properties, Entertainment, Naval Construction and Real Estate Developments. The company was founded in 1944 in Salvador da Bahia by Norberto Odebrecht, and is now present in South America, Central America, North America, the Caribbean, Africa, Europe and the Middle East. For more information, visit http://www.odebrecht.com
EDC is Canada's export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business. EDC's knowledge and partnerships are used by more than 7,400 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining and a recognized leader in financial reporting and economic analysis.
SOURCE Export Development Canada