What LPs Need to Know About LATAM Infrastructure Yield
This is the post you forward to your family office contact, your fund allocator friend, or the LP who keeps asking "but what are the actual returns?"
No marketing language. No "up to X%" without context. Just the economics of LATAM infrastructure credit, the yields, the risks, the structure, and an honest comparison with alternatives.
The Yield Table: What LPs Actually Earn
Let us start with what matters most. These are LP yields by country, based on our rate model across the full risk spectrum (score 0-7, where 7 is lowest risk):
At Indicative Rates (Pre-Verification)
| Country | Operator Rate = LP Rate | Deposit Rate (Reference) | LP Spread Over Deposits |
|---|---|---|---|
| Peru | 15.6% - 21.3% | 4.25% | 11.35% - 17.05% |
| Brazil | 17.3% - 24.5% | 10.75% | 6.55% - 13.75% |
| Colombia | 15.5% - 21.8% | 9.75% | 5.75% - 12.05% |
| Uruguay | 12.5% - 18.3% | 4.5% | 8.0% - 13.8% |
| Paraguay | 13.0% - 19.0% | 5.0% | 8.0% - 14.0% |
| Mexico | 13.0% - 18.8% | 7.0% | 6.0% - 11.8% |
| Ecuador | 13.3% - 18.5% | 5.5% | 7.8% - 13.0% |
| Chile | 11.3% - 14.8% | 4.5% | 6.8% - 10.3% |
| Costa Rica | 12.0% - 17.8% | 4.0% | 8.0% - 13.8% |
| Panama | 10.5% - 16.5% | 3.5% | 7.0% - 13.0% |
At Potential Rates (Post-Verification, Post-DD)
After due diligence and tax authority verification, operator rates decrease by up to 2 percentage points. Since LPs earn the same rate the operator pays, LP yields improve by the same amount:
| Country | Potential Rate (Operator = LP) | Improvement vs Indicative |
|---|---|---|
| Peru | 13.6% - 19.3% | Up to 2.0pp |
| Brazil | 15.3% - 22.5% | Up to 2.0pp |
| Colombia | 13.5% - 19.8% | Up to 2.0pp |
| Uruguay | 10.5% - 16.3% | Up to 2.0pp |
| Mexico | 11.0% - 16.8% | Up to 2.0pp |
| Chile | 9.3% - 12.8% | Up to 2.0pp |
The LP always earns at least the country's deposit rate plus 4.5 percentage points. This is the LP floor, below this, the economics do not work for either party.
How the Fee Model Works
There is no rate spread. LPs earn the full operator rate. DOB does not sit between the operator and the investor on yield.
LP Rate = Operator Rate
DOB's revenue comes entirely from two fees:
- 1.5% one-time success fee, charged to the operator when the fundraise closes. This covers origination, structuring, and placement.
- 0.5% ongoing admin fee, charged on distributions to investors. This covers pool administration, reporting, and compliance.
No management fees on AUM. No performance fees above a hurdle rate. No hidden spread on the yield itself.
Why Fee-Only (And Why That Is the Point)
For context, here is how our total platform cost compares to alternatives:
| Platform/Product | Fee or Cost Structure |
|---|---|
| Traditional bank (LATAM) | 5-15pp spread (deposit rate to lending rate) |
| Private credit fund | 2-3% management fee + 20% carry above 8% hurdle |
| Fintech lending platform | 3-8pp spread baked into rate |
| P2P lending | 2-5pp platform fee on yield |
| DOB Capital | 1.5% success fee + 0.5% on distributions (no rate spread) |
The fee-only model is deliberate. We are building a marketplace, not a fund. Our incentive is volume, more assets tokenized, more capital deployed, not extracting margin from each deal's yield.
For LPs, this means 100% of the operator rate goes to you. For operators, it means the rate they see is the rate investors receive, full alignment. For DOB, it means we need to be efficient and scale to be profitable.
Fee Impact on LP Yield
These two fees are DOB's entire revenue model. In practice, they reduce the effective LP yield by approximately 0.5-0.7pp on an annualized basis (depending on capital deployment speed and distribution frequency):
| Fee | When Charged | Approximate Annualized Impact on LP Yield |
|---|---|---|
| 1.5% of capital raised | At closing (charged to operator) | 0.15-0.3pp (amortized over asset life) |
| 0.5% of distributions | Each distribution (charged on LP payout) | 0.3-0.5pp |
| Total | 0.45-0.8pp |
Net of all fees, LP yields remain substantially above deposit rates in every market we operate in.
The Reserve Structure: How LPs Are Protected
Infrastructure credit in emerging markets carries real risk. The reserve structure is designed to absorb losses before they reach LP capital.
Variable Reserves by Risk Tier
Every pool maintains a reserve fund sized according to the risk profile of the underlying assets:
| Risk Tier | Score Range | Reserve Requirement | What This Covers |
|---|---|---|---|
| Low risk | 5-7 | 5% of pool | 6-8 months of payments without revenue |
| Medium risk | 3-4 | 10% of pool | 7-9 months of payments without revenue |
| High risk | 0-2 | 15% of pool | 8-10 months of payments without revenue |
Co-Liquidity Requirement
In addition to the risk-based reserve, every pool maintains a 7.5% co-liquidity buffer. This is capital that DOB and/or the operator contribute alongside LP capital, ensuring skin in the game.
Total retained capital = Risk reserve + Co-liquidity:
| Risk Tier | Reserve | Co-liquidity | Total Retained |
|---|---|---|---|
| Low risk | 5% | 7.5% | 12.5% |
| Medium risk | 10% | 7.5% | 17.5% |
| High risk | 15% | 7.5% | 22.5% |
What Reserves Actually Protect Against
The reserves are designed to cover the most common failure mode in infrastructure credit: temporary revenue interruption.
Consider a solar farm operator who loses their primary off-taker due to contract renegotiation. Revenue goes to zero for 3 months while a new contract is negotiated. During those 3 months, LP distributions continue from the reserve fund. If the operator secures a new contract, revenue resumes and the reserve is replenished. If they do not, the reserve buys time for an orderly resolution.
The 6-10 month coverage window (depending on risk tier) is based on analysis of infrastructure asset recovery times in LATAM markets. Most temporary disruptions resolve within 3-6 months. The reserve provides a buffer beyond that to account for outlier scenarios.
What Reserves Do NOT Protect Against
Let us be direct: reserves do not protect against total loss scenarios. If an operator commits fraud, if an asset is destroyed, or if a jurisdictional event (expropriation, regulatory change) eliminates the asset's value entirely, reserves are insufficient. These are the tail risks of emerging market infrastructure credit, and no reserve structure fully mitigates them.
This is where the legal structure (SPV, asset transfer, local enforcement) becomes critical, and why due diligence exists as a paid gate before assets go to market.
Pool Structure: How Capital Flows
The pool structure is designed for transparency and programmatic execution:
Capital Deployment
- LP commits capital to a specific pool (defined by geography, asset type, or risk tier)
- Capital is held in a Stellar-based escrow until deployment conditions are met
- When an asset passes due diligence and legal structuring, capital is deployed from the pool
- Deployment is recorded on-chain, LP can verify exactly where their capital is at all times
Revenue Distribution
- Operator generates revenue from the infrastructure asset
- Revenue is verified against tax authority data (where connected)
- Distribution amount is calculated: revenue minus operating costs, reserves, and fees
- Distribution is executed on Stellar, settles in 3-5 seconds to all LP wallets simultaneously
- LPs can convert to local currency via fiat off-ramp or hold as stablecoin
Programmatic Buyback
If an LP wants liquidity before the asset's maturity date, the pool supports programmatic buyback under certain conditions:
- Buyback price is determined by remaining cash flows, discounted at the pool's current rate
- Buyback is funded from new LP capital entering the pool (not from reserves)
- If no new capital is available, buyback request enters a queue
- Maximum buyback per period is capped to prevent liquidity runs
This is not instant liquidity. It is structured liquidity, better than a locked 5-year fund commitment, but not as liquid as a public market. We are honest about this because misrepresenting liquidity is how platforms lose trust.
Bermuda Regulation: Why It Matters
DOB Capital operates under a Class M digital asset business license from the Bermuda Monetary Authority (BMA).
Why Bermuda
Bermuda was chosen for three reasons:
-
Regulatory clarity: The Digital Asset Business Act (DABA) 2018 is one of the most comprehensive regulatory frameworks for digital assets globally. It covers custody, AML/KYC, cybersecurity, and consumer protection.
-
International recognition: BMA regulation is recognized by institutional investors, family offices, and fund allocators who would not touch an unregulated platform. The license is a credibility signal.
-
Cross-border functionality: Bermuda's regulatory framework accommodates assets from multiple jurisdictions (critical for a LATAM-wide platform) without requiring separate licenses in each country of origin.
What the License Requires
The Class M license imposes ongoing obligations:
| Requirement | What It Means |
|---|---|
| Annual audit | Independent audit of financial statements and operations |
| AML/KYC compliance | Full anti-money-laundering and know-your-customer procedures |
| Cybersecurity framework | Documented and tested security protocols |
| Business continuity plan | Procedures for operational resilience |
| Regulatory reporting | Quarterly and annual reports to BMA |
| Minimum capital requirements | Sufficient capital reserves to operate |
These are not trivial. They impose real costs and constraints. But they also mean that when an LP asks "who regulates you?" we have a clear, credible answer.
Comparison vs Alternatives: The Honest Matrix
Here is where we position relative to what an LP could do with the same capital:
| Alternative | Expected Yield | Liquidity | Risk Profile | Minimum Investment | Regulatory Oversight |
|---|---|---|---|---|---|
| Bank deposits (LATAM) | 4-10% | High (demand/term) | Very low (FDIC/FGS equivalent) | Low ($1K+) | Central bank |
| Government bonds (CETES, CDTs, BTP) | 6-10% | Medium (secondary market) | Low (sovereign risk) | Low-Medium | Securities regulator |
| Corporate bonds (LATAM) | 8-14% | Medium (secondary market) | Medium | Medium ($50K+) | Securities regulator |
| Private credit fund | 12-18% | Low (3-7 year lock) | Medium-High | High ($250K+) | Fund regulator (varies) |
| Fintech lending (Credijusto, R2, etc.) | 15-25% | Low-Medium | High (consumer/SME) | Medium ($50K+) | Limited |
| DOB Capital infrastructure pools | 9-23% | Low-Medium (structured buyback) | Medium (infrastructure-backed) | Medium ($25K+) | BMA Bermuda |
The Honest Pitch
Let us be clear about what this is and what it is not:
This is NOT:
- DeFi yield farming (no algorithmic returns, no governance tokens, no Ponzi dynamics)
- Risk-free income (infrastructure assets in emerging markets carry real, material risk)
- Instant liquidity (your capital is deployed into physical assets with multi-year timelines)
- A replacement for your fixed-income allocation (this is alternative credit, not investment grade)
This IS:
- Infrastructure credit with real machines, real contracts, and real cash flows
- Government-verified revenue backing the distributions you receive
- On-chain settlement and transparency that traditional private credit cannot match
- Returns that compensate for emerging market risk without the opacity of traditional private credit
- A fee-only model (no rate spread) that puts 100% of the operator rate in your pocket
Country-by-Country Risk Assessment
Not all LATAM markets are equal. Here is our framework for thinking about country risk and how it affects LP yields:
| Country | Deposit Rate | Political Risk | Currency Risk | Legal Enforcement | DOB Advantage vs Bank |
|---|---|---|---|---|---|
| Peru | 4.25% | Medium | Low (sol stable) | Medium | Very High (+8.5pp) |
| Uruguay | 4.5% | Low | Low (peso stable) | High | Very High (+8.0pp) |
| Paraguay | 5.0% | Medium | Medium | Medium | High (+5.5pp) |
| Colombia | 9.75% | Medium | Medium | Medium | High (+4.5pp) |
| Brazil | 10.75% | Medium | High | Medium-High | High (+4.3pp) |
| Mexico | 7.0% | Medium | Medium | Medium | Medium (+3.0pp) |
| Ecuador | 5.5% | High | Low (dollarized) | Medium-Low | Medium |
| Chile | 4.5% | Low | Low | High | Low (rate comparable to bank) |
| Costa Rica | 4.0% | Low | Low-Medium | Medium-High | Medium |
| Panama | 3.5% | Low | None (dollarized) | Medium-High | Medium |
The High-Yield Markets
Peru and Uruguay are the standout markets for LP returns. Both combine low deposit rates (meaning high LP spread over risk-free alternatives) with strong DOB advantage versus bank lending (meaning the operator has a genuine reason to use the platform instead of going to a bank).
In Peru specifically, the gap between what banks charge PYME borrowers (22-30%+, per SBS data) and DOB's indicative rates (15-21%) creates room for LP returns of 14-20% while the operator is still saving significantly versus their bank alternative.
The Challenging Markets
Chile is the most challenging market for DOB's value proposition. Chilean banks are efficient, well-capitalized, and offer competitive PYME rates. The DOB advantage is primarily in asset types and profiles that banks will not finance (certain infrastructure categories, operators without traditional credit history), not in rate arbitrage.
Ecuador presents unique opportunity (dollarized economy, meaning no currency risk for USD-denominated LPs) but also higher political risk. The dollarization advantage is partially offset by Ecuador's history of unilateral debt restructuring.
Portfolio Construction: How Sophisticated LPs Should Think
For LPs allocating to LATAM infrastructure through DOB, we recommend:
Geographic Diversification
No more than 30% of a portfolio in any single country. Concentrate on high-DOB-advantage markets (Peru, Uruguay, Paraguay, Colombia) while using low-risk markets (Chile, Panama, Costa Rica) as anchors.
Asset Type Diversification
Infrastructure assets have different correlation profiles:
| Asset Type | Revenue Driver | Correlation with GDP | Cyclicality |
|---|---|---|---|
| SaaS | Subscriptions | Low | Low |
| Energy | PPA/spot + tariffs | Medium | Low |
| Data Centers | Contracts + colocation | Low-Medium | Low |
| Fleet | Service contracts | Medium-High | Medium |
| Mining | Commodity prices | High | High |
| Real Estate | Rents | Medium | Medium |
| Agriculture | Harvest + commodity prices | Medium-High | High |
A balanced portfolio would overweight low-cyclicality assets (SaaS, energy, data centers) and underweight high-cyclicality assets (mining, agriculture) unless the LP specifically wants commodity exposure.
Risk Tier Allocation
For a first-time LATAM allocation, we suggest:
| Risk Tier | Allocation | Expected Yield | Reserve Coverage |
|---|---|---|---|
| Low risk (score 5-7) | 50-60% | 9-14% | 12.5% total retained |
| Medium risk (score 3-4) | 30-35% | 13-18% | 17.5% total retained |
| High risk (score 0-2) | 10-15% | 17-23% | 22.5% total retained |
This produces a blended portfolio yield of approximately 12-16% with a weighted average reserve coverage of 15-17%.
What We Tell Every LP
We close every LP conversation with the same statement:
"This is infrastructure credit in Latin America. The yields are real because the risks are real. Your capital will be deployed into physical assets operated by entrepreneurs in developing economies. Things will go wrong, some operators will underperform, some assets will face challenges, some markets will have disruptions. The reserve structure, the diversification, the due diligence, and the tax authority verification all exist to manage those risks, not to eliminate them. If you want guaranteed returns, buy government bonds. If you want infrastructure yield with transparency and on-chain settlement that traditional private credit cannot offer, let us talk."
Want to see the operator side of this equation? Our simulator shows indicative rates by country and asset type in 2 minutes. LPs can use it to understand the yield landscape before committing capital.
