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The Guaranteed CRA as an instrument to promote small producers
By Leandro Issaka | 07 May 2021 at 16h
Operation is revolutionary for the agribusiness capital market, which has not yet managed to adequately cross the barrier of corporate financing operations
On March 29, the first Certificate of Agribusiness Receivables (CRA) was issued, guaranteed by the National Bank for Economic and Social Development (BNDES).
It was Ecoagro's 59th Issue, backed by promissory notes issued by individual and corporate producers who are clients or associates of Cotrijal Cooperativa Agropecuária e Industrial, an agricultural cooperative based in the city of Não-Me-Toque, in Rio Grande do Sul.
The operation was revolutionary for the agribusiness capital market, which has not yet been able to adequately cross the barrier of corporate financing operations.
Since the second half of the 1990s, the rural credit market has been marked by direct support from the BNDES. With the exhaustion of official rural credit sources, the bank implemented a series of investment programs to leverage the productive infrastructure of farmers and cooperatives.
In developing this role, two important consequences for the market of credit to small and medium-sized producers have been generated.
In the first place, access to credit at subsidized rates and extended grace periods made the conditions offered by the private initiative, at market rates, unattractive to "ill-accustomed" producers.
The second consequence is linked to the lack of supervision of the direction of the resources. The financing lines end up becoming mere loans, with undue deviations of purpose.
These factors have encouraged rural producers not to structure themselves to access other types of credit, mainly via the capital market, which, as a rule, is more rigid in terms of control over the allocation of resources, thus ensuring investment in productive infrastructure.
However, the BNDES seems to be reviewing its operations in the segment.
The Guaranteed CRA (as the CRA with this type of guarantee from BNDES has been called) materializes the entity's new position, which is in line with a new regulatory framework for agribusiness financing, initiated with the Agro Law (Law no. 13,986, dated April 7, 2020), and, more recently, with the creation of the Investment Funds in Agroindustrial Productive Chains (Fiagro) by Law no. 14,130, dated March 29, 2021.
Three series of CRA were issued (senior, mezzanine and subordinated), being the senior the only one with the endorsement of BNDES. It was applied a rate equivalent to 100% of the accumulated variation of the DI Rate, plus the prefixed rate of 0.5% per year (in a year of 252 working days). This is equivalent today to an interest rate of 3.15% per year. Although post-fixed, it is very attractive for rural financing.
The guarantee obviously has a cost. It is not reflected in the interest rate, but in the "all in" cost of the operation, which corresponded to a commission of R$ 515,366.93 to be paid by the securitization company, deducted from the payment price of the CRA.
Here is a possible criticism: isn't the BNDES just changing the vehicle through which the rural producer obtains financing at subsidized rates?
At this point, I see the glass half full, as a good optimist. The BNDES' participation will serve as a catalyst for this type of fundraising. If the history of this and the next CRA issues shows that the structuring was adequate, that the contractual framework and other guarantees were safe and sufficient, as well as that there was no history of default justifying the execution of the guarantee, there may be a path for future issues without the need for the BNDES' endorsement. It will not happen soon, but the first step will have been taken.
It is inevitable to compare the CRA with the Certificate of Real Estate Receivables (CRI), which is a decade ahead in terms of regulation and practical application.
It is true that today the CRI is able to foment small real estate entrepreneurs, although mostly through restricted offerings raised with professional investors, be it a developer in São Paulo or a subdivision company in Mato Grosso.
With the Guaranteed CRA, a first step has been taken for the rural certificate to reach small and medium-sized producers, in my opinion with a much higher growth capacity than the CRI market.
Obviously, due to the pioneering spirit and the risks that permeate a "new product", the issue was the object of a restricted offering aimed only at professional investors, whose distribution was carried out by Banco Alfa, as the leading coordinator of the offering.
Another point worth mentioning is that the backing of the CRAs issued in the analyzed operation was promissory notes.
The first promissory note-backed transaction in which I participated was a CRA issued in August 2019, already within the regulations of CVM Instruction 600, with specific rules on the issuance and offering of CRAs. Since then, this type of backing has become more popular in securitization, both through CRAs and CRIs.
In the case of Cotrijal's CRA, the promissory notes were issued by rural producers, each one of them having the attachment of a Rural Product Note (CPR) with a pledge of soybeans or corn (but considering the possibility of attaching more than one crop as collateral for an issue, another atypicality of the case, since as a rule the guarantees are limited to a single type of crop).
The formalizations of the promissory notes and the CPRs are verified by an extrajudicial formalization and collection agent, hired in the operation for this purpose, who must verify and certify the existence and enforceability of the agribusiness credit rights and the CPRs, as well as their legality, legitimacy, veracity and correct formalization.
This will undoubtedly give more security to the operation and decrease the risk, in view of the pulverization of the debtors.
I am very hopeful that this pilot project of the BNDES will gain scale, that the CRA with the endorsement of the BNDES will become a factor of democratization of credit and that it will allow small producers access to credit through the capital market, with adequate risks for the investor, accessible rates for the rural producer, as well as security and predictability for both sides.
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