Brazil Hopes Green Debt Will Help Fund $3.1 Billion Amazon-Crossing Railway

(Bloomberg) -- Brazil is hoping global investors demand for green debt will help raise funds for some of its largest infrastructure projects, including a multi-billion railway crossing through a portion of the Amazon rainforest.

Latin America's largest economy is seeking a “green seal” for the $3.1 billion Ferrograo railway, and for other projects in its $46.9 billion infrastructure concessions program, Infrastructure Minister Tarcisio de Freitas said in an interview in London on Tuesday.

Rights to operate Ferrograo are expected to be auctioned in the first half of next year. The government is working with the Climate Bond Initiative to obtain credentials that will allow private companies interested in buying the concessions to fund their investments through the sale of green debt.

For the railway project, green credentials would come from a potential reduction in the number of trucks moving grains through the region, lowering carbon emissions and land development, the Minister said.

Global demand for sustainable debt including green bonds has surged this year reaching $346 billion of sales, according to BloombergNEF. In Europe, six borrowers including Danish wind-farm operator Orsted and Spanish refuse collector FCC Medio Ambiente SA were in the market on Wednesday raising green debt.

Read more: After a $30 Trillion Bonanza, Green Finance Is About a Cop

But Brazil's government initiative may face skepticism from some investors after reports showed Amazon deforestation jumped the most in over a decade and on concern that Jair Bolsonaro's presidency is failing to protect the rainforest. Investors such as Nordea Asset Management suspended purchases of Brazilian government bonds in August in response.

Read more: Brazil Admits It Has a Deforestation Problem and Vows to Fix It

Last month, the government promised to fast track the issuance of local green bonds, and it has pledged to use the securities to finance agricultural exports in the past.

To contact the reporter on this story: Marianna Aragao in London at mduartedeara@bloomberg.net

To contact the editor responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net

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