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Fibria’s CRAs popular with hungry investors

Fibria has issued CRAs in the Brazilian local markets which were well received by investors. The significant demand stems from the fact that CRAs are rarer than other issuances due to their complex structures, alongside the company’s strong credit rating.

Jun 30, 2016 // 5:25PM

Fibria, the Brazilian pulp producer has issued two sets of Agribusiness Receivables Certificates (CRAs).

One of the CRAs is a 4-year BRL880mn note maturing in 2020, which carries a yield of 97% of the overnight rate, or CDI according to the company’s press release.

The release noted that the second CRA is a 7-year BRL470mn note maturing in 2023 set to yield IPCA + 5.9844%. Both issuances were backed by Fibria’s export credit notes.

The press release stated that demand for the certificates reached BRL2.4bn. The significant demand can be attributed to the fact the issuance was a CRA, and also because of it was the largest ever issued in the Brazilian market.

Fibria Chief Financial and Investor Relations Officer Guilherme Cavalcanti said the book building process registered record demand from investors for the certificates, which reached BRL2.4bn.

The issue of CRAs is limited across the country’s agriculture sector as there are many conditions that need to be met when issuing according to Carlos Adati, CFO of Seara Agronegocios.

However due to current volatility in Brazil’s domestic markets, investment opportunities have become increasingly scarce.

The certificates were able to attract significant demand because of Fibria’s credit rating. The company carries an investment grade rating with a stable outlook from both Fitch Ratings and S&P Global Ratings.

The company decided to issue in real because Brazilian corporates tend to find local funding cheaper than dollar financing.

“Net exporters can issue in dollars as their revenues will be in dollars. However many exporters find it easier to issue in real,” Adati noted.

He added that although the bond markets can be more expensive than the loan markets in Brazil at present, he expected future issuances on the country’s local debt capital markets. 

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