Brazil's sanitation reforms hit financing roadblocks

Six years after the Marco Legal do Saneamento Básico was enacted, Brazil's water and sewage sector shows a mixed picture. While the legal reforms have attracted private capital worth over R$ 420 billion and promise service expansion to more than 100 million people, 43.3% of the population still lacks sewage collection and 15.9% lacks piped water. High real interest rates and limited credit make long‑term infrastructure projects financially unattractive, prompting investors to turn to thematic bonds such as Sabesp’s US$ 1.5 billion blue bond and Iguá’s green debentures.

The financing strain is evident in recent public‑private partnership auctions. In Ceará and Goiás, several lots received no bids, highlighting investor caution amid costly financing and uncertain revenue guarantees. Industry players remain committed but are now scrutinising contract terms, risk allocation and regulatory stability before committing to projects in poorer, smaller municipalities.