Oil producer Petroleos Brasileiros is preparing to finance local buildings through a structure typically used by Brazilian construction companies. The R$200 million ($89 million) 10-year securitization is backed by lease payments owed by Petrobras under a "built-to-suit" lease agreement. Rio Bravo Securitizadora will issue the paper and a source close to the deal said Santander Investment has agreed to purchase the offering in its entirety.
Under the terms of the structure, Petrobras establishes Fundo de Investimento Imobiliario RB Logistica, a fund 99% owned by the oil company, and 1% by asset manager Pentagono DTVM, which also acts as the trustee. Petrobras gives the fund rights to a specified property, divided into two lots, that the company owns in Macae, a city in the state of Rio de Janeiro. At the same time, the fund signs a 10-year leasing agreement with Petrobras. The fund then transfers the lease rights to Rio Bravo, which issues the securitized paper. The bond proceeds flow back to the fund, which pays a construction company to put up on building on each of the two lots. Once the construction is complete, Petrobras will lease the buildings from the fund.
While the risk of these built-to-suit transactions reflect that of that of the lessee, Moody's Investors Service has concluded that the risk of the deal exceeds that of the corporate by a few notches. The agency has rated the deal Aaa.br' on the national scale and Baa3' on the local currency, global scale. Petrobras, meanwhile, is notched at A2' on the local currency, global scale. For local investors, the national scale is what matters, but the difference is illustrative of the risks that Moody's sees with securitizers in Brazil.
"There is a risk that the assets of the securitization company could be attached if the securitization company does not pay its pension, labor or tax liabilities," Moody's said in a pre-sale report on the transaction. In effect, under Brazilian law, in a distressed situation other liabilities would be senior to the securitized receivables, even though the assets are segregated from the issuer, according to a source familiar with this transaction. To date, neither Rio Bravo nor other securitizers have ever been forced to disrupt a transaction because of unrelated liabilities, the source said.
Rio Bravo figured in the news in early August when the International Finance Corp. and GMAC-RFC agreed to buy a combined 40% stake in the company.
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