Brazil Homebuilder Mulls Chunky ABS

Brazilian homebuilder Gafisa is trying to put together a sale of receivables worth BRL300m, Duilio Carciolari, CFO, tells LatinFinance. The purpose of the deal would be to deleverage and free up room for capital with a more practical use. “We don’t want to have cash tied up in receivables,” explains Wilson Amaral, Gafisa’s CEO. Ideally, Gafisa would like to eventually move the entire portfolio off balance sheet, but it may have to keep it on the books for a while, even after a contract to sell receivables is signed. Target buyers include the Brazilian banks that play in real estate credit – Bradesco, Itau Unibanco, Santander and HSBC – says Carciolari. State-owned Caixa Economica Federal and Banco do Brasil are likely to avoid delving into that product for the time being, say analysts. Receivables in question are installment payments for units that have already been built and partially sold. They earn some 15% over the IGP inflation index, says Carciolari. As for new debt, Gafisa says it is not considering accessing any sizable long term funds. Private sector bank financing is too expensive for the builder at the moment, says Amaral. Real estate borrowers face annual rates at 140%-150% of the CDI, which adds up to roughly 16% a year, he adds. Gafisa finances some 80% of new construction with funds from buyers’ savings accounts in the case of middle and upper-income homeowners, and from the state’s FGTS fund for low-income housing. For savings accounts, funding is at TR plus 9%-12%, while for FGTS, the price is TR plus 6%-9%.