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.

 

Comments

  1. Marco Valim says:

    Hi Vernon. Congrats on your report about Trendbank. You were very straight to the point and very faithfull to most events. I am passionate about Trade Receivables FIDCs and recently I made my spin off from Petra Group that used to be the administrator of Trandbank’s FIDCs. I believe that these structures are the most reliable, flexible and secure way to trade receivables. It was the main reason that factoring companies grew so fast and took over most of the market from Middle Market banks in Brazil.
    Tlon and Uqbar are very reliable sources of info, but there are always some information behind the courtains that would tie all the lose ends together. I would be very glad to talk to you personally one day about all of this as I was the person that spent ours talking to Petros about how they could come out of this trap, but the end that you described so well was inevitable. Petra did an amazing job and prevented even more losses as Trendbank had another FIDC, but as I always say to my investors, the only risk of this type of product is fraud and as long as you have people independently looking into it on a daily basis, you will be fine. That was not the case in TrendBank’s FIDC.

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