Incentivized debentures are a type of private credit title that has an exemption/reduction of income tax for the investor. They were created within the scope of Law 12,431/2011, a Brazilian government initiative with the aim of promoting infrastructure projects, expanding their access to capital market resources.
The IR exemption/reduction can facilitate, for issuing companies, access to investors willing to finance their projects through this type of paper. However, to issue an incentivized debenture, the Company will need to define and structure the projects in which it intends to invest and submit them for approval by the Brazilian government. The issuing company must demonstrate a commitment to allocating the resources obtained from the debentures into future payments or reimbursement of expenses for investment in infrastructure.
Thanks to their advantages and despite their challenges compared to “common” issues, incentivized debentures have been gaining ground in recent years, showing the importance of the capital market for the promotion and development of Brazilian infrastructure.
