Mantega Touts 10% Return on Brazil Roads to Lure Investors

Brazil will offer investors high rates of return for its infrastructure projects as it seeks to carry out a $235 billion investment plan, Finance Minister Guido Mantega told investors today in New York.

Financing conditions offered by the government will ensure investors have rates of return of more than 10 percent as they operate and build 7,500 kilometers (4,660 miles) of highways, 10,000 kilometers of railways, 159 ports, among other works, Mantega said during a road-show that seeks to lure investors

President Dilma Rousseff’s administration is trying to reverse a drop in investment that has kept the world’s second biggest emerging economy from rebounding. Last year, Brazil grew at the slowest pace of all major Latin American economies and investment fell for five straight periods through the third quarter.

“We are perfecting the model of the highway concessions and other concessions so that they reach a high level of profitability,” Mantega told reporters. “We have been talking to the sectors that are interested and smoothing out rough edges to improve the program.”

The government earlier this month delayed road auctions in order to improve conditions and increase profitability to draw more bidders. The government is revising the terms for new auctions.

“When you look at the deterioration in business sentiment and the experiences of past auctions that were not welcomed by private sector, you have to adapt,” Andre Loes, chief Latin America economist at HSBC Bank Brasil SA, said by telephone yesterday. “I think the government is adapting.”

Central bank estimates that growth slowed to 1 percent last year even after policy makers reduced interest rates to a record 7.25 percent and lowered taxes.

Slower growth didn’t prevent inflation from accelerating in January to 6.15 percent, the fastest pace in 12 months.

Before it's here, it's on the Bloomberg Terminal.