Issuances of Agribusiness Receivables Certificates (known as “CRA”) reached BR$ 5 billion in 2020 and are becoming one of the main fund raising instruments for agribusiness companies in Brazil.
CRAs are fixed income securities issued in Brazilian capital market, backed by receivables originated by commodities and agricultural products companies, cooperatives, trading companies, among others.
The proceeds raised are normally used to finance the production, sale and/or industrialization of agricultural products and inputs or machinery used in agribusiness production, and for debt restructuring.
To structure the issuance of CRAs, the company assigns its receivables to a securitization firm, which will issue the CRAs in capital markets offerings to be acquired by individual investors, funds, and family offices. The proceeds raised by the securitization firm will be used to pay the assignor company for the negotiated receivables.
The new agribusiness bill enacted in April allowed the issuance of CRAs in foreign currency (such as US dollar).
Adding BR$ 11.8 billion in 2019 and BR$ 5 billion in 2020, issues of these securities have become attractive both for agribusiness companies, which now have a new option to raise medium to long-term funds outside the banking system, and for investors, especially individuals, because the income from CRAs is exempt from Income Tax.