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 (www.latinfinance.com).