Pinheiro Neto and Stocche Forbes on Iguá Sergipe deal
Pinheiro Neto Advogados and Stocche Forbes Advogados have advised on the fourth issuance of simple non-convertible debentures by Iguá Sergipe, totalling BRL 1.04 billion, in a transaction that marks the first time an IDB Group entity has fully subscribed a Brazilian debenture issuance.
The offering was entirely taken up by IDB Invest, the private sector investment arm of the Inter-American Development Bank (IDB), setting a precedent for multilateral-backed infrastructure financing through Brazil’s domestic capital markets.
The debentures carry a 20-year tenor with final maturity in May 2046 and are remunerated at IPCA plus a spread of 8.9774% per annum. Interest is paid semiannually, with principal amortized in 34 consecutive semiannual installments beginning in May 2029. The issue price was set at BRL 1,000.00 per unit, with securities identified under ISIN BRISPEDBS028. Banco Votorantim acted as Lead Underwriter, while Banco BTG Pactual served as financial advisor to Iguá on the project finance side.
The debentures qualify as incentivized infrastructure bonds under Federal Law No. 12,431, granting favorable withholding tax treatment to eligible holders, including exemption for individuals and non-resident investors. Eligibility was confirmed by the Ministry of Cities through Ordinance No. 1,463/2025, classifying the underlying investment program as a priority infrastructure project in the basic sanitation sector. The securities were further classified as Green and Sustainable Bonds in alignment with Iguá Saneamento’s Sustainable and Blue Finance Framework and in accordance with ICMA Green Bond Principles, Sustainability Bond Guidelines, Social Bond Principles, Green Loan Principles, and Social Loan Principles, with compliance confirmed by a pre-issuance second-party opinion issued by BVQI.
Proceeds will finance capital expenditures under the MAES investment program — covering the expansion of water supply and sanitation coverage and the reduction of water losses across the 74 municipalities of the concession — as well as reimburse the fixed concession fee payment. The overall investment plan carries an estimated total cost of BRL 4.09 billion and a target completion date of December 2029. Proceeds may also be used to reimburse interest payments under two bridge debenture issuances executed in December 2024 and March 2025.
A central legal challenge involved reconciling IDB Invest’s internal compliance and approval requirements — including KYC procedures and investment committee approvals — with the formal requirements of a Brazilian public offering conducted under the automatic registration procedure of CVM Resolution No. 160. This required extensive negotiations to develop a bespoke solution with no prior precedent in the Brazilian market.
The transaction also introduced an innovative shared collateral model. The security package — comprising a fiduciary assignment of concession receivables, insurance proceeds, project contracts, and linked bank accounts — was extended on a pari passu basis to IDB Invest alongside the holders of the 2nd and 3rd debenture issuances of Iguá Sergipe. Two General Meetings of Debenture Holders were convened to obtain the necessary consents. Critically, the indenture incorporates a forward-looking security sharing framework that pre-authorizes the accession of future long-term financing creditors — including new capital market issuances, BNDES, BNB, and other multilateral or program-based financings — without requiring a new bondholder assembly for each subsequent accession, materially streamlining the issuer’s ongoing financing roadmap. Additional credit support is provided by a corporate guarantee from Iguá Saneamento, valid until project completion, with mechanisms allowing substitution by a first-class bank guarantee at any time.
Pinheiro Neto Advogados acted as deal counsel to the issuer, Iguá Sergipe, the guarantor, Iguá Saneamento, and the Lead Underwriter, Banco Votorantim. The Pinheiro Neto team was led by partners Fernando dos Santos Zorzo (pictured top left) and Luiz Felipe Fleury Vaz Guimarães (pictured top right), supported by senior associate Marcello Mammocci Pompilio and associates Pedro Prazeres and César Inoue Emetério Silva.
Stocche Forbes Advogados acted as counsel to IDB Invest as the debentureholder. The Stocche Forbes team included partners Frederico Cursino de Moura (pictured bottom left) and Marco Aurelio Rabenhorst Saliba (pictured bottom right) , alongside associates André Regis dos Reis, Larissa Campbell Moreira Chaves, Vitoria Vidal Serrano, Clara Francisco Pereira, and Isabela Marins de Carvalho, as well as trainee Amanda Dames de Oliveira.
