Brazil’s goal of achieving universal access to water and sanitation by 2033 has created enormous demand for financing.
In São Paulo state, Sabesp has emerged as a pivotal player in this national push, securing a landmark transaction that combines sustainable finance innovation with international capital mobilization.
In November 2024, the company completed a $784 million A/B loan arranged with the International Finance Corporation (IFC), the World Bank’s private sector arm. The proceeds will fund the Integra Tietê program — a sweeping initiative to expand sewage collection and treatment networks, clean up the Tietê River, and bring water and sanitation services to underserved communities in Greater São Paulo. The program addresses one of Brazil’s most urgent environmental and social challenges: the rehabilitation of a river system that stretches over 1,000 kilometers and supports more than 20 million people.
The transaction, which wins Sustainable Infrastructure Financing of the Year, was structured in two complementary tranches. The first, a R$1.06 billion (about $184 million) sustainability-linked loan from the IFC, featured a 10-year tenor at SOFR plus 168 basis points and a built-in currency swap. Crucially, the financing tied disbursements to performance-based indicators for sewage collection and treatment, ensuring that investment outcomes could be measured against public policy goals. This structure linked capital raising directly to Sabesp’s operational progress on sanitation.
The second tranche, closed in May 2025, took the financing to another level. Leveraging the IFC’s A/B loan platform, Sabesp raised $600 million equivalent, with commitments split between dollars and euros. This tranche was classified as a blue loan under the company’s Blue Finance Framework, underscoring its exclusive focus on water-related investments. The five-year facility carried a margin of SOFR plus 180 basis points and drew participation from seven international commercial banks. Many had no prior footprint in Brazil, highlighting the transaction’s success in broadening Sabesp’s reach to new sources of capital.
The deal also introduced important financial and contractual innovations to Brazil’s sanitation sector. Part of the proceeds were earmarked for performance-based contracts (PBCs), which incentivize service providers to outperform on efficiency and results. By combining sustainability-linked, blue finance, and PBC mechanisms in one package, the structure set a new benchmark for how infrastructure financings can align with global ESG frameworks while advancing local development priorities.
For Sabesp, the transaction carried additional significance as the company’s first structured financing after privatization. It provided a clear demonstration of institutional maturity and credibility with multilateral lenders and private financiers alike. By mobilizing large-scale, long-term funding, the deal positioned Sabesp to accelerate its ambitious five-year investment plan of R$70 billion and to meet concession targets that require universal coverage by 2029, four years earlier than Brazil’s federal deadline.
The impact is far-reaching. Beyond mobilizing global banks into a sector historically reliant on domestic funding, the financing will directly expand sewage treatment for more than 1.5 million people, particularly in low-income neighborhoods on the outskirts of São Paulo and in Guarulhos. Indirectly, millions more will benefit from improvements in the water quality of the Tietê River, an ecosystem vital to the state’s economy, biodiversity, and public health.
Sabesp CFO Daniel Szlak stresses the importance of diversifying funding sources as the company ramps up investment. “We will invest R$70 billion in the next five years,” he says. “We need to have access to all possible sources of funding.”
While he notes that the cost of this deal was not necessarily lower than issuing debentures in local markets, its strategic value lies in connecting Sabesp with new international partners and expanding the company’s financial toolkit. “Some of them do not even have offices in Brazil,” he adds, reflecting the breadth of banking relationships established through the IFC platform.
By combining innovation, scale, and measurable development outcomes, the Sabesp financing demonstrates how sustainable lending can be leveraged in emerging markets to advance critical infrastructure goals. It is a milestone for Brazil’s sanitation sector, a landmark for blue and sustainability-linked financing in the region, and a compelling case study in how capital markets can be harnessed to deliver social and environmental impact at scale.
Sustainable Infrastructure Financing of the Year
SABESP A/B Loan
R$1.06bn A loan; $600m B loan
Sponsors: Companhia de Saneamento Básico do Estado de São Paulo (SABESP)
A Lender: IFC
Lenders: Bank of Baroda; Bank of China; BBVA; BofA; Citi; Credit Agricole; ICBC; IFC
Counsel to Lenders: Becker, Glynn, Muffly, Chassin & Hosinski; Machado, Meyer, Sendacz e Opice
Counsel to Sponsor: Cescon, Barrieu, Flesch & Barreto; Clifford Chance
All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email awards@adminnewspack