Bloomberg: Ecoagro Aims to Double Brazil Farming Loan-Backed Bond Sales

By Joao Oliveira – April 20 (Bloomberg) — Eco Securitizadora de Direitos Creditorios do Agronegocio SA plans to more than double sales of bonds backed by loans to farmers in Brazil this year to benefit from a government bid to boost farm lending.

Ecoagro, the first company to receive authorization from Brazil’s securities regulator to offer agribusiness-backed loans, issued 280 million reais ($178 million) of the securities since May and aims to sell another 320 million reais this year, Chief Executive Officer Moacir Ferreira Teixeira said.

“We have a potential market of billions of reais in agricultural assets that can be repackaged to help finance farming investments,” Teixeira said in an April 15 interview at Ecoagro’s headquarters in Sao Paulo. “It’s also an alternative for investors seeking to link their holdings to the commodities industry in Brazil.”

Sales of the so-called certificados de recebiveis do agronegocio, or CRAs, rose to 314.9 million reais in March from

158.5 million reais in January, according to figures published by clearinghouse Cetip SA – Balcao Organizado de Ativos & Derivativos on April 18. Agricultural assets that may be used to create CRAs totaled 16.9 billion reais in 2010, according to Cetip. The bonds were created to help boost lending for farming.

Ecoagro completed the sale of six agribusiness-backed bonds since last year, when the securities regulator authorized issuance of the instruments. It repackaged the securities for soybean, sugar, ethanol and bioenergy producers.

Bigger Yields

The biggest transaction, a 110 million-real CRA, was arranged for ETH Bioenergia SA, a Brazilian ethanol producer controlled by Odebrecht SA and Sojitz Corp., in December. ETH Bioenergia declined to comment on the transaction, according to a communications firm representing the company, which declined to be named because of internal policy.

Ecoagro sold 12 million reais of CRAs on April 12 with a maturity of five years, its longest yet. The securities yield

115 percent of Brazil’s interbank overnight rate, or about 13.44 percent, based on yesterday’s CDI, as the benchmark for floating-rate debt is known. The yield was greater than the 109 percent of CDI offered on ETH Bioenergia’s CRAs.

“With these two operations and the negotiations we already have under way, I can easily say we’ll reach 600 million reais by the end of the year,” Teixeira said, “because these instruments are sold to a sector with little access to credit.”