In a recent report, Fitch Ratings said that risks inherent in Brazilian multi-seller/multi-obligor ABS have become more heightened in recent deals backed by factoring company receivables. Generally, factoring companies in Brazil are privately held businesses that buy trade receivables from a variety of companies at a discount.

“Over the past few years, many factoring companies have transformed their business operations into securitization structures via FIDCs [receivable investment funds, the main vehicle for non-real estate ABS in the country],” the agency said. As essentially non-regulated institutions, Brazilian factoring companies present a series of risks which are then carried over into ABS deals.

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