Funding: Structural Changes

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In recent years, Abdib’s Financing and Guarantees Committee has been at the epicenter of discussions on the sources of funds and the structure of guarantees to support the massive volume of investments in infrastructure required by Brazil. The discussion takes place in a scenario of constrains on both supply and demand. If, on the one hand the demand for funds temporarily fell due to the reduction in investments, on the other, public development banks began to impose restrictions, limiting the availability of credit for investments.

In a transition scenario, the same players will have new roles. The capital market will increasingly support the financing of projects through debentures. Through the committee, in 2018, Abdib suggested extending tax benefits to pension funds and foreign-based individuals who acquired debentures. At the same time, it is attempting to strengthen and give credibility to the structure of guarantees, especially during the construction phases, thus enabling the nonrecourse project finance.

Abdib also strengthened the dialogue with public development institutions, such as the BNDES and Caixa, in order for them to continue funding infrastructure investments, especially when the economic activity accelerates and the demand for resources grows again, including from entrepreneurs willing to carry out larger projects with lower rates of return – as example, railways. Broadly speaking, the evaluations included the role of public banks in disbursements, boosting capital markets and project structuring.