MIGA has issued $66.5 million in guarantees to Cooperative Centrale Raiffeisen of the United States, covering its $70 million shareholder loan to Banco Rabobank International Brasil SA (Rabo-Brazil). The guarantee is for a period of up to eight years and covers the risks of transfer restriction and expropriation.
Rabo-Brazil is planning to use the shareholder loan to participate in trade receivable funds, which acquire discounted receivables from companies that finance consumers and small and medium-size enterprises. Such funds are an important funding source for Brazilian companies, allowing trade receivables originators to finance their revolving short-term needs with long-term funding. Rabo-Brazil focuses on the Brazilian food and agribusiness market.
Structured as a local currency securitization, the project will also help develop local capital markets. In addition, Rabo-Brazil financing for companies is expected to help create indirect employment. By fostering financial sector development and broadening access to credit, the project is consistent with Brazil’s country assistance strategy, which focuses in part on the development of a more competitive financial market.