High Premiums And Cheap Credit Distort Litmus Test For Brazilian Airports

CFW View: The eagerly awaited auction for the concession of three international airports saw an average premium of 347% on the minimum bid price. Whilst the outcome serves as a display of confidence in the Brazilian aviation sector and the infrastructure business environment in general, the high premiums and the absence of more established players obtaining the winning bids raises some concern over investment returns. At the same time, the offer of cheap BNDES financing raises familiar questions over the commercial viability of projects.

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