The U.S. is a pioneer in an array of assets, but if you want to bone up on tuition-backed deals, you've got to study abroad. Until recently, the only market worth the trip was Chile, which hosted the first two tuition bonds in the region during the first half of the year. Now Brazil has something to offer. Latching onto a fund structure that has made inroads over the last several months, finance firm Ideal Invest has set up a revolving deal backed by tuition receivables. "It already has R$20 million (US$6.9 million) in receivables and should grow sharply in coming months," said a source familiar with the deal, which is rated brBBB+' by Standard & Poor's.

So far, six institutions in the vicinity of Sao Paulo that are either technical or secondary schools have borrowed from the structure for a total R$6 million (US$2.1 million) and in turn have sold rights to their receivables. In order to receive funds, a beneficiary sells receivables with a coverage ratio of 3X. The average life of receivables is roughly one month. For now, Ideal is marketing the paper to private investors. "They want to test the structure to see if they want to go public," the source said. Known as FIDCs, receivables funds got started this year in a belated response to a regulatory framework set up in December 2001. Their success has been mixed. While they offer alluring tax incentives for investors, they must contend with yieldy treasuries. As growing confidence brings treasuries to heel, observers expect FIDCs and other structured paper to have more a fighting chance.

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