Concessions fueling investors' optimism for Brazil

Through federal government measures such as updates to concession models, Brazil has created the necessary conditions to return to growth and foreign investors are starting to believe in the country again, emerging markets investment expert Will Landers said, according to a government release.

With the new government of Michel Temer, an economic recovery looks to be around the corner with the prospect of falling inflation, lower interest rates and an improved labor market, said Landers, who is the global head of emerging markets for US investment fund BlackRock.

Currently in recession, "we are now starting to believe in growth of 2% next year and 3-4% in 2018," said Landers, who attended talks in New York where Temer presented numerous infrastructure concessions under Brazil's investment partnerships program PPI, part of infrastructure plan Crescer.

"The concessions program will open up significant opportunities for investors," Landers was quoted as saying in the release.

Temer was joined by investment secretary Moreira Franco, finance minister Henrique Meirelles, mining and energy minister Fernando Coelho Filho and transport minister Maurício Quintella.

"The receptivity of the PPI by US investors was the best possible. We have seen much interest from investors and infrastructure operators in our first round of auctions," said Quintella.

The president said Brazil is enjoying a moment of "extraordinary political stability," and that progress in areas such as fiscal and labor law reforms was being made.

BlackRock is one of the largest asset managers in the world and the biggest ETF provider in Latin America.

UPCOMING CONCESSIONS

Initially, 34 concession projects are planned under PPI, with the first tenders expected in 2017. The new program offers improved rates of return and 30bn reais (US$9.29bn) from public banks to help fund the initiatives. The program includes transportation, oil and electric power, and waterworks projects.

For this year, Brazil is also planning tenders for concessions for four international airports and two port terminals that fall under the national logistics investment program PIL of the previous government, which was announced last year.