(Corrects to say Cavalcanti is chief financial officer, not
CEO, in paragraph 1)
By Tatiana Bautzer
NEW YORK, March 31 Fibria SA, the world's
largest eucalyptus pulp producer, is considering selling up to 1
billion reais ($319 million) worth of notes backed by
agricultural receivables in Brazilian domestic debt markets,
Chief Financial Officer Guilherme Cavalcanti said.
Selling so-called CRA debt, as the notes are commonly known,
allows Fibria to raise funds at cheaper borrowing costs than
Brazil's overnight lending rate because of their tax-exempted
nature, he said. Fibria can invest the proceeds in investments
yielding higher returns, generating a financial gain, he said.
The company has yet to decide whether selling CRAs, and has
not hired any banks to explore or underwrite a sale, Cavalcanti
added. Fibria has about 1 million hectares (2.47 million acres)
of land, giving it enough assets that could be used as
collateral for future CRA sales, he added.
Companies with large swaths of land or receivables from
crops already sold use CRAs as a powerful fundraising tool,
because of strong demand from wealthy families and other
individual investors that want to take advantage of 15 percent
tax exemption the securities enjoy.
The market for asset-backed debt has offered farming and
real estate companies the chance to tap much-needed financing at
a time when Brazil undergoes the harshest bank loan retraction
in at least two decades.
The income-tax exemption for retail bond investors means
corporate borrowers can offer paying 4 percentage points to 5
percentage points below the Selic overnight rate, which now runs
at 12.25 percent. Economists expect the Selic to end this year
below 10 percent.
The company's common shares rose 5.5 percent to
28.82 reais on Friday. The stock has fallen 9.7 percent this
($1 = 3.1309 Brazilian reais)
(Editing by Guillermo Parra-Bernal and Richard Chang)