The Brazilian government has unveiled a major infrastructure investment program to help stimulate its sluggish economy. Goldman Sachs analyst Marcio Prado believes the new initiatives create a buying opportunity for transportation investors.

“Given levered balance sheets, we believe listed operators could employ capital increases to fund new opportunities,” Prado explains. “Alternatively, new players could use new projects/privatization (airports) to establish a sizable position in the country.”

Prado believes the Brazilian Development Bank will continue to be a major funding source even as the company continues to consolidate its balance sheet.

Goldman believes lower interest rates are a secular theme in Brazil, but the current real interest rate of around 5 percent will continue to be a value driver when it comes to concession stocks.

Goldman sees Brazil’s largest railroad operator, Rumo, as the best investment opportunity in the transportation space. The firm has raised…

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