Brazil tax-exempt securities face reform risk as stock hits R$2.3T

Brazilian market prices in taxation of incentivized securities (LCIs, LCAs, infra debentures) under the next government, regardless of winner. The stock of these instruments has more than doubled since 2022 to R$2.3 trillion, with an estimated tax waiver of R$50 billion, raising fiscal concerns. The core issue is the distributional impact: who benefits from the exemption, not the exemption itself.