Four Brazilian auto suppliers are ready to climb into a different kind of vehicle: the receivable investment fund (FIDC). Forming part of conglomerate G Brasil Participacoes (Grupo Brasil), the companies are jointly tapping their trade receivables for an initial issue this week of subordinated and senior shares totaling R$50 million ($23.3 million), according to a source on the transaction.
The overall program is split into R$85 million of senior shares and R$15 million in subordinated shares. Moody's Investors Service gave the senor shares a Baa3' local currency global rating and Aaa.br' national scale rating. The subordinated portion is unrated. The structurer on the deal is Gainvest do Brasil Asset Management, which has worked on two other FIDCs in the person loan sector.
The four originators are Sifco, which makes heavy forged and machined auto parts; Metalurgica de Tubos de Precisao, a manufacturer of precision steel tubes; Alujet Industria e Comercial, which makes alloy cast wheels; and Vulcan Material Plastico, which turns out polyvinyl chloride and plastic components for the interiors of sedans, SUVs, and trucks.
With the road show wrapping up earlier this month, the originators are expected to issue an initial volume of R$42.5 million of senior shares and R$7.5 in subordinated shares early this week, with funding a few days later, according to the source. The originators will divvy up the subordinated portion. A second, and final, issue is slated two months from now.
The eligibility requirements include caps on concentration by originator and by obligor, and on the maturity of the receivables.
The obligors in the transaction are split into two camps, each accounting for half of domestic sales, according to the source on the transaction. One is a group of 11 leading automakers, including the likes of Volvo Group, Ford Motor Co. and General Motors. The other camp consists of a much larger crowd of smaller and more obscure auto companies. About 90% of Grupo Brasil's revenue comes from existing customers that have an established relationship with the group.
The transaction is backed by all domestic sales to companies outside the group, a figure that hit roughly R$1 billion last year, according to the source on the deal.
Banco do Brasil is the master and back-up servicer on the FIDC and Oliveira Trust is the trustee.
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