New regulations in Brazil are steering small and medium-sized bank originators toward building more, and bigger, mezzanine tranches into their securitizations, typically done through the receivable investment-fund (FIDC) vehicle.

Players see little choice outside this route for issuers wanting to grow their portfolios, as alternative sources cannot possibly pick up the slack. But, at the same time, a buy-side bottleneck could be looming as these riskier slices so far appeal only to rarefied tastes in Brazil.

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