The Brazilian receivables investment funds (FIDCs) market is breaking new ground, with an open-ended fund that acts basically like a multi-seller conduit launching soon, according to a source close to the deal. Finexia Consultoria em Investimentos e Administradora de Ativos has structured the fund, backed by trade receivables originated by small-to-medium companies.

Fitch Ratings has rated the senior shares in the deal BBB(bra)' on the national scale, the first time the agency has rated shares in a fund below the A' category, a Fitch official said. Finexia, a company that used to operate in the factoring business, will act as an investment advisor to fund manager Oliveira Trust DTVM, said the source close to the deal. Finexia is working directly with the deal's obligors in selecting receivables. For the deal to maintain its triple-B rating, at least 85% of the collateral has to be linked to obligors rated at BBB(bra)' or above, according to a Fitch report. The other 15% of receivables can be linked to obligors that are either rated below triple-B, are unrated or rated by an agency other than Fitch. "There are very specific obligors in the deal, but a diversified bunch of originators," the source said. The originators will be, for the most part, suppliers of the obligors.

As an open-ended fund, investors can request redemption at any time. There is, however, a 90-day grace period from the moment an investor requests redemption. The 90 days is equal to the cap on the maturity of the receivables. Deutsche Bank is the custodian on the deal.

Domestic issuance in Brazil has slowed down recently over political noise. Bribery allegations have been dogging high-ups in the political party of President Luiz Inacio Lula da Silva. The scandal appears to be creeping closer to Lula himself, as a former close advisor to the president is now facing accusations, according to news reports.

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