Silverado Asset-Backed Securities: Fraud & Deceit in the Brazilian ABS Market

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Investors lost over R$400 million in the failure of Silverado’s two main ABS securities, called Fundo de Investimento em Direitos Creditórios (FIDC).  Latin America Structured Finance has written this article to inform credit investors about the unique risks posed by the Brazilian credit markets, especially the market for FIDCs.

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Investors Seek Compensation from Silverado and Service Providers

DSC_2422This story was translated from DCI, a Brazilian business journal.  Investors in Silverado’s FIDCs (Brazilian ABS) seek compensation from the Silverado Gestão e Investimentos Ltda for damages incurred due to the collapse of at least two Silverado FIDCs: Maximum and Maximum II.  In addition, the investors are suing the administrators and custodians for the FIDCs as well as pursuing the FIDC’s manager.

This is the first time that we have seen investors seek damages from FIDC service providers and this could be a turning point in the fund industry in Brazil.  Click here to read the full report. investors-silverado-ask-for-compensation-final

The Hour of the Nightmare: So You Want to Invest in Brazilian Real Estate?

Thecroc 2 black white1000 Hour of the Nightmare: A Translation

According to EXAME, “Dozens of real estate developers have not been able to deliver real estate dwellings that they sold before the development broke ground.  As of this date, close to 25,000 families have been financially damaged.  What does this say about the health of the market?”  With little regulatory oversight, lax enforcement, and years to reach settlements, Brazil’s Real Estate Industry is plagued by fraud, larceny, and regulatory violations. To read our report, click on the link below. The Hour of the Nightmare



Trendbank Abandons R$400 million ABS

Trendbank Multisetorial investors in for a rough rid


Click on the link below to read the entire article

LASFA Trendbank Article Final

This is the first of two articles discussing Trendbank’s decision to abandon its FIDC (Brazilian ABS) that was collateralized by factoring receivables and other types of business debt.  As we discuss in the article, rapidly growing defaults in the ABS forced the company to make the not unheard of decisions to fire 300 of its 360 employees (most of whom worked in the servicing area), move the company’s offices, and call an investor meeting to announce it all.  Austin Rating seemed surprised; the Brazilian rating agency lowered the ratings 11 stops from AA-(Brazil) to B(Brazil) after reaffirming the AA- rating in May 2013. Planner Corretora, the administrator, also seemed be caught by surprise.  This seems strange given that Trendbank fired so many people and moved the company headquarters, which were a mere ten blocks from Planner’s headquarters.  The saddest part of the entire story is that investors should have seen this coming two years ago.