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Brazil announces new bid to attract foreign capital for green projects using FX hedge mechanism

The Brazilian government announced a new Eco Invest bidding process on Wednesday to attract foreign capital into innovative and sustainable projects. This is the first time that a hedge against foreign exchange has been offered.

The government will direct Climate Fund resources towards financial institutions in order to create foreign exchange and performance risk-hedging strategies. According to the Finance Ministry, these are crucial to enable long-term investments in Latin America's biggest economy.

According to the Ministry, financial institutions must submit their proposals by November 19.

In the same way as in previous auctions, banks are required to leverage private investment, stating this time exactly how much equity will be mobilized.

The government says that the proceeds of the auction will be used to support tech-based companies and startups in developing projects related to bioeconomy and energy transition, as well as circular economy initiatives such bioplastics, waste management, and battery recycling.

Eco Invest, launched last year, aims to attract international capital for long-term sustainable project by leveraging public funding through innovative financing mechanisms.

The first auction took place in October 2024. A second was held in August to restore pastureland that had been degraded. (Reporting and editing by Kylie Madry; Marcela Ayres)

(source: Reuters)