LATIN FINANCE: Redemption Road (Brazilian infrastructure)

Brazil’s bold infrastructure push has been heralded as a game changer. Investors, however, may balk at low yields – and risks that remain hard to evaluate

Much fanfare has accompanied Brazil’s announcement of an ambitious $133 billion reais ($66 billion) infrastructure investment program. A new law to jump start long term debentures has raised hopes that the private sector will finally prove a key player in the sector. But the market may prove less attractive to foreign investors than the hype would suggest.

Law 12,431, which finally passed in an amended version as law 12,715 on September 17, was greeted with enthusiasm. It provides tax breaks to investors when they invest in debentures with tenors over four years.

The amendments are well written and addressed the doubts of investors over liabilities for non-compliance with government conditions on tax exemptions, for example, says Marcelo Leitão, head of debt capital markets at the São Paulo office of Portuguese bank Banco Caixa Geral.

This is the start of an article on infrastructure developments in Brazil. To see the full article, please go to Latin Finance's website ( 

About admin

I've been researching and writing on Brazilian financial markets, industry and economy since 2006 for a wide range of specialist media, consultancies and investors. Before that I spent over 10 years in London and New York writing for and editing magazines and journals dedicated to finance, investment and economics in developing markets, mostly for the Euromoney Institutional Investor group and Thomson Financial. Areas of coverage Below are samples of areas that I cover and some of the common themes that I investigate. Capital markets BM&FBovespa markets *capital raising trends: via equities (IPOs and secondary issuance), debt and loans *the asset management industry: legislation and coverage of the key hedge, pension and investment funds * corporate governance: how the regulator is seeking to strengthen best practice and limitations * debt markets: the nascent corporate markets, attempts to boost liquidity and new insturments. * private equity market: why this market has been so successful, who’s involved. *electronic, high frequency trading and alternative trading platforms: what does the future hold? Banking *credit: the growth of consumer and business credit and competition between banks and models *Public versus private: the role and market share of public and private sector banks and the politicization of the industry * internationalization: which Brazilian banks are expanding overseas and where * investment banking: the growth of the domestic market and who’s winning which mandates *regional banks and development banks: what role they play in the industry and how they compete Mining *licensing: the complex process of obtaining environmental, water, land and operating licenses at a state and federal level. * capacity: the feasibility and sustainability of capacity increases * financing: how miners are raising finance in Brazil and abroad *competition: the interplay Vale, MMX and junior miners *logistics: rail, road and port connections Oil and gas: the fund raising issues related to the massive of pre-salt (link) Multilatinas: Who are they and how and where they are expanding Meatpacking: Are debt burdens sustainable, what are the different business models for areas such as branding and distrbution Agriculture: How are farms consolidating, what are environmental risks, how can foreign investors be involved. IT and software: Can Brazil take on India and build a viable long-term IT industry? For more information on clients and work, please see the media and consultancy sections.
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