A railway does not pay for itself commercially at the outset: it is capital intensive (the cost per kilometer can exceed R$ 20 million) and takes a long time to mature. For that reason, no single source is enough. What the article maps out is a mix: long-term credit from BNDES, Viability Gap Funding instruments under the new Política Nacional de Outorgas Ferroviárias, incentivized debentures at record volumes and, on the front Diogo highlights, external financing.
In practice
- Foreign-currency financing, through bond issuances or debt from multilaterals such as the IDB and IFC (the World Bank's arm), is an alternative to the domestic mix.
- This path fits mainly operators that transport commodities, whose freight is priced in line with the dollar.
- Dollar-indexed revenue works as a natural hedge for dollar-denominated debt, reducing exposure to exchange rate variation.
As Diogo Nebias sums it up: “These multilateral institutions are alternatives for operators that transport commodities, with prices pegged to the dollar, which reduces exposure to exchange rate variation, that is, there is revenue in reais tied to the dollar versus payment of the debt in dollars.” Matching the currency of revenue to that of the debt ceases to be a detail and becomes part of the project's bankability analysis.
Read the article in O Globo.
