A Brazilian receivable investment fund (FIDC) backed by future contracts to supply sugar and liquid sugar is set to launch later this month, according to a source close the deal. The originator is Dedini-Dulcini Agroindustrial, and the size is currently set at R$80 million ($36.8 million), with a R$76 million senior tranche. With a maturity of one year, the senior shares are rated a short-term F1(bra)' by Fitch Ratings on its national scale. The yield has been set at 110% of the benchmark CDI rate.
Gainvest do Brasil and LinkCorp. are joint arrangers on the deal and Oliveira Trust is the administrator. Citibank is the custodian.
A performance bond provided by Mapfre Vera Cruz Seguradora covers 10% of the deal. Such guarantees are standard for future flow deals, given that Brazilian securities regulator CVM typically requires special approval for uninsured transactions in that sector. The transaction also relies on a reserve fund.
Obligors for the Dedini-Dulcini deal include household names like Nestle, Coca Cola, and Danone. Each contract with these buyers has a twelve-month life, matching the tenor of the transaction.
Meanwhile, an FIDC for Goias state has seen its launch date delayed for later this month after regulators requested modifications to the structure, according to a source close to the deal. Sized at R$9.7 million, the 14-month deal is rated B(bra)' by Fitch. While the exact nature of the modifications wasn't disclosed, a source close to the deal said they stemmed from the fact that this is the first time the CVM is vetting an FIDC backed with past due sales taxes.
The administrator on the Goias transaction is Mellon Servicios Financeiros, the structurer Integral Trust, and the custodian Banco Itau.
The asset class is not entirely foreign to Brazil's capital markets. Past due sales taxes were tapped once in a $52 million debenture originated by Rio Grande do Sul. But until recently that transaction seemed hardly a ringing endorsement of the asset class, with Moody's America Latina placing its A3.br' rating on downgrade review in March. The agency confirmed the rating on July 21 however, citing the generous helping of overcollateralization - about 224% - available to the outstanding notes, which amount to R$29 million.
Elsewhere in Brazil, an FIDC backed by loans to small and medium companies is also timed to launch this month. With Banco Daycoval as the originator, the deal is currently sized at roughly R$127.5 million, but could be followed by additional issuances bringing the total closer to R$250 million, according to a source close to the deal. Standard & Poor's has given a brAAAf' rating to the senior shares, which amount to R$100 million and have a maturity of three years. The yield on the senior tranche is set at 106.5% of CDI.
Numbering over 200, the debtors in the deal operate in a variety of industries and present varying degrees of creditworthiness. "The difficulty is how to manage these kinds of portfolio in terms of correlations and diversification of risk," the source said. The loans behind the transaction are guaranteed by the debtor companies' trade receivables.
Intrag, an arm of Banco Itau, is the fund administrator and Integral Trust is the arranger. Itau is also doubling as the custodian.
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