Itaú BBA’s projections for Brazil’s infrastructure landscape through 2026 paint a picture of both opportunity and challenge, with potential reverberations across Latin America. The bank’s head of project finance, Marcelo Girão, outlined a robust pipeline of investments, particularly in highways, sanitation, and digital infrastructure, while also highlighting significant hurdles in the energy sector.
The highway sector is set to dominate the infrastructure agenda, with over 200 billion reais (US$36 billion) in contracted investments expected by 2026. This surge in activity presents a boon for capital markets and banks, with opportunities in financing and advisory services. The influx of resources into the debt market, driven by high interest rates, underscores the importance of well-structured projects. Moreover, the widening pool of participants in auctions suggests a competitive and dynamic market.
In sanitation, the sector’s growth trajectory is marked by large-scale assets and regulatory adjustments. The upcoming auctions in Pernambuco and the privatization of Copasa are expected to drive significant activity. However, the sector must navigate new reference standards from ANA and potential rebalancing discussions, which could impact existing contracts. Despite these challenges, sanitation remains a key player in the infrastructure debenture market.
Digital infrastructure, particularly data centers, is emerging as a new frontier for investment. The anticipated regularization of REIDI could catalyze project development, with potential benefits for the Northeast’s energy sector. This shift towards digital infrastructure reflects broader global trends and could position Brazil as a regional hub for data services.
The energy sector, however, faces a more nuanced outlook. Centralized generation has struggled with high capex and low energy prices, exacerbated by curtailment issues. The priority now is portfolio preservation and asset monitoring. Distributed generation, while more resilient, is expected to undergo consolidation. The sector’s future hinges on resolving curtailment and understanding the impact of tax reform. The upcoming capacity reserve auction and potential battery auctions could unlock new investments, but the path forward remains uncertain.
Beyond these traditional sectors, airports, urban mobility, and social PPPs are gaining traction. The potential re-auction of Galeão, large-scale urban mobility projects in São Paulo, and PPPs for schools and hospitals present new avenues for growth. Additionally, biofuels, particularly e-methanol and biomethane, are gaining momentum, driven by the Fuel of the Future program. While SAF and green hydrogen progress more slowly, they represent the next wave of innovation.
Itaú BBA’s international presence further amplifies these trends. With a strong foothold in Chile, Colombia, and other Latin American markets, the bank is well-positioned to facilitate cross-border investments. Chile, in particular, stands out as a market with significant growth potential, reflecting Itaú BBA’s strategic investments in the region.
The implications for the broader market are profound. The intense cycle of infrastructure investments in Brazil could spur regional economic growth, attract international capital, and drive innovation in financing models. However, the challenges in the energy sector and the need for regulatory adjustments in sanitation underscore the importance of policy stability and market predictability. As Brazil navigates these opportunities and hurdles, the ripple effects will be felt across Latin America, shaping the region’s infrastructure landscape for years to come. The sector’s development will hinge on the ability to balance ambition with pragmatism, ensuring that investments are not only robust but also sustainable and inclusive.