Brazil solar energy services company Brasol plans to use mostly equity to fund close to BRL1 billion ($195 million) in investments this year, but it could return to the debt market if interest rates go down by the end of the year, CEO Tyler Eldridge told LatinFinance on Wednesday.
“We always prioritize funding through equity because we take a longer-term vision,” Eldridge said.
“We have quite a large equity commitment from our shareholders, especially when interest rates are relatively high in Brazil,” he said. “It is also a moment when our customers are feeling the squeeze of interest rates.”
Brazil’s central bank has increased the Selic benchmark rate to 13.75% from 2% in 2021 and 2022 in an attempt to rein in inflation.
Brasol, which is controlled by German manufacturing conglomerate Siemens, could look to raise debt in the local bond market if interest rates start to decline before the end of the year, according to Eldridge. The company last issued 20-year real estate receivable certificates known as CRIs in 2021.
“We do have debt capital market activities, but there are moments that are opportune. Now is not the best time to do it. We want to see the long-term yield to go down a little bit,” he said. “I imagine we can see long term interest rates come down in the last quarter of this year to consider some additional funding.”
Brasol had outlined BRL600 million in investments for this year but revised the plan due to strong demand for energy saving services, Eldridge said. Some 60% of Brasol’s activities are associated with solar energy, while others are related to electric vehicles and battery charging, he said.