Brasilia - After the government's unsuccessful attempt to tax incentivized debentures last year, the economic team has been increasing its warnings about these securities, one of the main financing instruments for the country's infrastructure sector. The concern is with competition from Treasury Direct bonds.

One solution being considered would be to limit the issuance of these debentures, creating a kind of maximum ceiling per sector or a total volume allowed per year, but the idea is still under study, according to NeoFeed .

The idea conceived within the National Treasury would be a strategy to review tax incentives currently given to economic sectors such as infrastructure, but also, in the same context, to other private securities such as letters of credit and receivables certificates – LCA and CRA (agribusiness) and LCI and CRI (real estate market). The Executive also attempted to tax these securities which, like debentures, are exempt from Income Tax (IR).

At the end of last year, speaking to an audience largely from the infrastructure sector, the National Treasury Secretary, Rogério Ceron, shared the Ministry of Finance's concern about this scenario, which, in his assessment, was creating a market distortion. He explained that a problem is beginning to emerge, but that a debate is necessary, involving the entire infrastructure sector and financing agents, which is "dry" and "complex."

Ceron acknowledges that there has been a significant boost in investments in Brazilian infrastructure stemming from this capital market financing mechanism, but warns that debenture issuances have grown so much that they are already straining the long-term interest rate curve and even making the issuance of these debentures more expensive.

“As the [debenture] market grew significantly, it began to compete with long-term Treasury issuances. So much so that last year, in several months, there were more private issuances than public issuances. Competition began [between debentures and Treasury Direct bonds],” the secretary stated at an event on PPPs in Brasília at the end of December.

According to Ceron, the incentivized debentures are costing the public coffers between R$ 40 billion and R$ 60 billion per year in implicit subsidies, that is, the fiscal effect due to the waiver of Income Tax and how much this is generating in premiums on the Treasury yield curve.

“If I were to give a direct subsidy to the [infrastructure] sector, it would be better for everyone. Giving R$ 60 billion in direct subsidies would be better than the tax benefit it receives from the incentivized sector,” he warns. “As it stands, it’s better to include a direct subsidy in the budget to reduce the cost of capital for infrastructure borrowers at the end of the line, rather than continuing with this type of incentive. It would be cheaper. The benefit would be greater for the borrower and it would be cheaper for the National Treasury,” he adds.

Even within the government, however, the issue is already causing divisions. While favoring the infrastructure sector and advocating for debentures as a way to leverage investments in the area in recent years, the Ministry of Transport says it is open to finding ways to circumvent any fiscal problems that may arise due to a supposedly excessive volume of incentivized debentures in the market.

However, he understands that the instrument has yielded positive results, which are confirmed by the large volume of projects currently financed by these private bonds.

According to George Santoro , executive secretary of the Ministry of Transport, the amount of debentures financing only highway and railway projects in Brazil jumped from R$ 3 billion a few years ago to more than R$ 30 billion in 2025.

According to data from the Brazilian Association of Financial and Capital Market Entities (Anbima), transactions involving these securities reached R$ 150.7 billion by November of last year, a record for the historical series. For the entire year of 2024, the total volume was R$ 135.1 billion.

“I understand the Ceron team’s unease regarding the competition between the bonds. I think it’s relevant, but this is a crucial point: if I don’t have the incentivized debentures, what am I going to put in their place to help with infrastructure?”, Santoro told NeoFeed , confirming that the Treasury team has also already brought this concern regarding the competition between incentivized debentures and Treasury Direct bonds to the Transport Ministry.

He further argued that there should be quality in tax expenditures with incentives for credit mechanisms such as incentivized debentures, and questioned whether tax benefits must prioritize efficiency in order to continue being granted by the government.

“Today we have other incentives being given to the economy, perhaps R$ 200 billion in tax expenditures. Are they efficient? This is the analysis that, in my opinion, the Treasury should conduct. Are they all as efficient as the incentivized debenture? Not that the Treasury is wrong. It is right and must solve the fiscal problem, but where is it most efficient to solve the problem? This dialogue must be frank and open,” he states.

“Choices have to be made within appropriate projects. If I made a mistake, gave tax incentives, spent money poorly, built something in a place where it shouldn't have been built, which won't change anything, I wasted money, generated more deficit, and didn't solve my competitiveness problem.”

Tax-exempt securities and public debt

Last year, the asset manager Sparta , which manages over R$17 billion, challenged the National Treasury's thesis suggesting a correlation between the growth of tax-exempt bonds and difficulties in rolling over public debt, in a monthly letter to investors . In general, the sector understands that debentures have been supporting the current large portfolio of projects.

In its analysis, the asset manager refutes the government's claim that incentivized debentures are harming long-term NTN-B issuances. "The correlation between two factors does not always indicate a cause-and-effect relationship," Sparta states, criticizing the official diagnosis.

Cláudio Frischtak, president of the consulting firm Inter.B, also acknowledges that incentivized debentures have played an important role in private infrastructure financing in Brazil, which currently accounts for two-thirds of all investment in the sector in Brazil. This level was historically recorded in the public sector, a figure that has changed in the last five years.

He considers, however, that it is necessary to see the "permanent and very serious" fiscal crisis that the country is currently going through, and even supports the idea of the government setting a maximum limit per year for the issuance of these debentures with public incentives.

“Even if we understand that there is a very large benefit, we have to look at the fiscal cost of debentures and also of all the tax incentives in the economy, which are very high in the country. So a review of tax expenditure is fundamental for us to get out of the fiscal crisis. And in this context of reviewing expenditures, it is positive to review the incentives for debentures,” says Frischtak.

According to the president of the consulting firm Inter.B, there are other sources of financing for the sector that can complement the infrastructure segment's demand for more resources for its projects. These include multilateral organizations, project finance, external fundraising, and the BNDES (Brazilian Development Bank).

"There has to be a fiscal limit. And the idea of placing limits on government tax expenditures is important. It's a rational approach," he says.