Brazil’s Treasury and Securities and Exchange Commission (CVM) are preparing to launch a new investment vehicle, aimed at boosting early-stage sustainable ventures. This new initiative, operating as an investment fund consortium, seeks to finance projects aligned with ecological transformation. Rogerio Ceron, a senior Treasury official, highlighted the favourable global economic outlook following positive U.S. inflation data, which bodes well for Brazil despite recent currency weakening and rising interest rate futures. Ceron expressed confidence that normalcy will soon return, a sentiment echoed by Finance Minister Fernando Haddad and President Luiz Inacio Lula da Silva, who have signalled a commitment to fiscal responsibility, aiding in the partial recovery of local assets.
The new investment vehicle will be linked to a green project structuring credit line, introduced in February as part of a broader initiative to attract private investments and strengthen Brazil’s environmental and climate stance. The credit line auction notice is expected in September, with released funds enabling financial institutions to establish the new structured investment funds. Ceron noted that the line’s 12-year term, with a grace period of up to seven years, is vital due to the long-cycle nature of these projects.
This credit line is the second of four planned under the EcoInvest program, following a blended finance auction notice last week, which aims to offer public capital to green projects predominantly funded by private investments. Wind and solar energy projects and transmission lines are excluded, as these sectors no longer require government support. Ceron mentioned that if the blended finance line achieves leverage around ten times, a government contribution of $1 billion to $2 billion could potentially generate $10 billion to $20 billion in financing. This initiative will allow private financial institutions to access medium and long-term funding for productive investments, previously available only through public banks.
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