Alerts
Incentivated Debentures (Green Bonds): Federal Government Decree expands the list of sectors for incentivized debentures in infrastructure project finances with environmental and social benefits
The Federal Government enacted, on April 25, 2023, Decree No. 11,498 (“Decree 11,498”), amending Decree No. 8,874/2016, which regulates the conditions for approval of investment projects considered as priorities and which may serve as ballast for the issuance of incentivized infrastructure debentures under Law No. 12,431, of June 24, 2011 (“Law 12,431”).
In this regard, Decree 11,498 expanded the list of sectors (in addition to those already included through Decree nº 10,387/2020, published on June 5, 2020) that may benefit from incentivized debentures in infrastructure project finances with environmental and social benefits, namely:
(i) basic sanitation;
(ii) irrigation;
(iii) education;
(iv) health;
(v) public security and prison system;
(vi) urban parks and conservation units;
(vii) cultural and sports facilities;
(viii) social housing and urban redevelopment.
Furthermore, the Decree 11,498 has expanded the list of projects that are deemed to provide significant environmental or social benefits and has included projects carried out in substandard settlements or isolated urban areas as they are considered to offer social advantages, in accordance with the definition established by the Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística – IBGE).
The enactment of Decree 11,498 is aligned with the Federal Government’s agenda to foster the domestic market and is part of a package being prepared to enhance credit through actions involving Public-Private Partnerships (PPPs), incentivized debentures, guarantee framework, super indebtedness and investor protection (among others).