Capital Markets | 5 Key Points In Issuances of “CRAs” by Brazilian Agribusiness Companies and Cooperatives

Brazilian securities named “Agribusiness Receivables Certificates” (CRAs) allow agribusiness companies and cooperatives in Brazil to raise funds from investors through capital market, without the need to be publicly held companies.

With issuances expected to exceed BR$ 25 billion in 2021, see below 5 characteristics of these securities:

1. What it is: CRAs are fixed income securities in the Brazilian capital market, backed by receivables from agribusiness. They can be issued in Brazil reais or foreign currency;

2. Who can raise funds via CRAs: commodity companies, tradings, cooperatives, industries, dealers, logistics companies, among others, related to agri products, inputs and machinery;

3. How CRAs are issued: there are generally 2 ways of issuing CRAs: (i) the “corporate” issuance, where the company issues a debt bond (such as debentures) to a securitization firm, which will issue the CRAs backed by the debt bond, or (ii) the “pulverized” issuance, where the company assigns receivables generated in its activity (such as barter, credit) to the securitization firm, which will issue the CRAs backed by such receivables. In both cases, the CRAs will be acquired by Brazilian or foreign capital market investors, including individuals (who are exempted from Income Tax), funds and family offices;

4. Is there a minimum size and term for CRAs?Based on the last 3 years, there were issues ranging from BR$ 20 million, with 3-year term, to 2 billion with 10-year term. That is, issues of CRAs are shaped according to the size of the assignor, risk of the receivables portfolio, business cycle, investors interest, among other market conditions;

5. Is the issuance of CRAs registered with the Brazilian Securities and Exchange Commission (CVM)? CRA issuances can be (i) registered with the CVM if carried out via a public offering (Regulation 400), where the securities may be offered openly to anyone, or (ii) waived from registration with the CVM if carried out via an offering with restricted efforts (Regulation 476), where the bonds may be offered strictly to 75 qualified investors and purchased by up to 50.

These securities certificates are expected to become very popular in the agribusiness chain in the coming years and represent one of the main ways of raising medium / long-term funds outside the banking system.


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