SANITATION FINANCING: LINES OF CREDIT AND STRATEGIES OF CORPORATIONS IN BRAZIL

Abstract

The objective of this research is to analyze the sources of financing available for the sanitation sector in Brazil and to identify the main forms of financing effectively used by companies classified as Corporations in the sanitation sector. The results showed that, although quite different in terms of the size of the total assets, the capital structure of the companies is very similar, with low leverage and preponderance of third-party resources obtained through federal resources from Caixa Econômica Federal, funding via debentures and financing lines from the National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Econômico e Social – BNDES), as well as from Development Financial Institutions (DFI), among which the Inter-American Development Bank (IDB), the Agence Française de Développement (AFD) and the Japan International Cooperation Agency (Jica). Thus, public financing and financing through development banks is still the main source of funds for the sector, although funding via debentures is relevant and there is great room for diversification. The difficulty of financing from third-party resources leads to the prioritization of tariffs for the expansion of financing services, which can be an impediment to universalization, given the need to expand to areas with low population density and/or lower purchasing power. In this context, lengthening the terms of financing and reducing the cost of capital, encouraging the active participation of development banks as financing agents and providing greater legal and contractual security for companies in the sector are fundamental aspects to achieve the universalization of sanitation services intended by the new legal framework for basic sanitation.

Keywords

• sanitation
• investment
• financing
• universalization
• financial institution for development (fid)