Abstract
ABSTRACT Context: in Brazil, there was an expansion of private funding via bond issuances, especially since 2017. Before that period, the sources of long-term financing were concentrated on public funding. Objective: this study aims to explore the main factors that could have positively affect Brazilian bond market and if it would be possible to improve project financing through this debt instruments. Methods: using mixed methods with econometric tests and qualitative interview analysis, this study assesses which were the factors that supported this growth and if there is any difference across industries. Results: we found that a change in the market trend has indeed happened around 2017, and it was more pronounced in specific industries such as electricity. Interviewees suggested that increases in demand (possibly triggered by the reduction of public sources of funding and the fall in local interest rates) could be the main factors that supported this change in trend. Conclusions: therefore, this study reinforces the importance of local market conditions and government policies affecting the relative attractiveness of private versus public sources of corporate investment.
Highlights
There is a long debate on how to finance infrastructure projects
The results suggest that the evaluated datasets are stationary based on the augmented Dickey-Fuller unit root test (ADF) unit root test (Table 1)
Long-term financing in the national context is governed by several aspects, ranging from problems related to the structure of the Brazilian financial system (Castro, Kalatzis e Martins-Filho, 2015; Beck & Levine, 2002) to the macroeconomic context experienced by the country at the time analyzed (Paula & Faria, 2012)
Summary
There is a long debate on how to finance infrastructure projects. The literature indicates that such projects involve long-term assets and that they require large amounts of funds (Ehlers, 2014). Credibility risks and low visibility of the return on investments end up inhibiting the attraction of private capital, limiting infrastructure projects that could generate important productivity gains (Ehlers, 2014). Given these difficulties, a possibility that often arises is to use governmental funding to leverage such investments. Stateowned banks can generate misallocation of public resources in less productive projects or for companies with no apparent credit restrictions, which could be financed by the private sector (Lazzarini, Musacchio, Bandeira-de-Mello, & Marcon, 2015)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
