BNDES grants financing guarantee of R$156 million to sugarcane producers

The National Bank for Economic and Social Development (BNDES) will support the production of around 50 sugarcane suppliers for Usina Coruripe Açúcar e Álcool, over five years. The Bank acts as guarantor for the issuance of Agribusiness Receivables Certificates (CRA) totaling R$156,4 million, through the BNDES Garantia product. The operation demands that companies follow environmental standards such as no deforestation and regular land use, among other requirements.

The structuring of the operation was coordinated by Itaú BBA, with support from Vectis and DATAGRO. The CRA is issued by Virgo Companhia de Securitização (Virgo), with BNDES playing the role of guarantor of 80% of the Senior class. The backing is made up of Financially Settled Rural Product Notes (CPR-Fs) issued directly by rural producers. The CRA is acquired by investors in exchange for remuneration and, in the case of individual investors, there is also a tax benefit, as a way of stimulating private financing for the agricultural sector.

In this operation, the approximately 50 rural producers involved benefit directly from the resources obtained from investors, as they are responsible for the credit securities that make up the backing. This structure differs from the CRA emissions regularly carried out by the sugar-energy sector, which tend to exclusively involve plants, direct beneficiaries of abstractions.

The requirement for the issuance of this CRA was the issuance of an external opinion from Bureau Veritas Certification – Brazil, an auditing services company, contracted to conduct an independent verification regarding the environmental compliance of all rural producers that are part of the operation.

The criteria for verification involve the non-conversion of native forest area, the regularity of land use, the analysis of climate risks and the definition of preventive actions. In total, there are approximately 17 thousand hectares of environmental reserves.

Bureau Veritas' opinion also considers the adherence of Usina Coruripe's Green Bond Framework – defined as an environmentally sustainable agriculture category – to the Green Bond Principles of the International Capital Market Association (ICMA). The verification includes an analysis of the work system of the parties involved in the operation, including producers, responsible for maintaining environmental compliance and low-carbon agricultural practices.