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Brazil: Corporates look to securitization

Companies take advantage of the growing popularity of the Fundo de Investimento em Direitos Creditórios, or the FIDC market. The Brazilian ABS fund, (FIDC) is growing in popularity as it enables companies to improve their debt situation by reducing the cost of funding and lengthening tenors.

Motorola Brasil is one of many companies launching asset-backed securitization deals in Brazil using the asset-backed securitization fund structure. The Brazilian ABS fund, or Fundo de Investimento em Direitos Creditórios (FIDC) is growing in popularity as it enables companies to improve their debt situation by reducing the cost of funding and lengthening tenors. Many firms are looking to lock in longer-term funding such as this in the run-up to Brazilian presidential elections next October.

Motorola’s Brazilian subsidiary launched a R$538 million ($245 million) three-year FIDC in November. The deal, priced at 105.4% of the Brazilian CDI (interbank deposit certificate), came in tighter than original talk of 106% of CDI. The deal will be used to securitize revenue from long-term equipment contracts with Brazilian wireless network providers.

Brazilian petrochemicals firm Braskem followed suit with roadshows for its R$400 million, three-year FIDC offering, with price talk of between 103% and 104% of CDI. In October, one of Brazil’s largest power generators, Companhia Energético de São Paulo (CESP), launched a R$650 million fund through Banco ABC, Bradesco and Banco Itaú. State-owned Companhia Paranaense de Energia (Copel) is believed to have a 10-year R$1 billion FIDC in the works and utility Companhia Energética de Minas Gerais (Cemig) has a R$2 billion FIDC on the way.

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