Receivables investment funds (FIDCs) remain the leading game in town for Brazil's domestic ABS market, with three transactions dropping into the pipeline last week. Two of the deals are backed by personal loans for government employees. Banco BGN is originating one of these transactions. Its program is sized at R$200 million (US$65 million), with an initial tap likely to reach R$50 million (US$16.3 million) for the senior piece and R$8.8 million (US$2.9 million) in a subordinated chunk. The fund is closed-ended and has a 36-month maturity.

Moody's America Latina rated the senior shares Aa2.br' on the national scale and Ba2' local currency, global scale. BGN arranged the deal itself, while structured finance regulars Motta, Fernandes Rocha provided legal counsel. Assuming a ceiling target yield of 120% of the benchmark CDI rate, the projected excess spread is 20%. The purchased loans carry interest rates that range from 35% to 55% a year. The fund manager is Oliveira Trust.

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