How to measure risks and gains with CRIs and CRAs? see tips

The offer of Real Estate Receivables Certificates (Cris) and Agribusiness Receivables Certificates (CRAs) skyrocketed in 2022.

According to the Brazilian Association of Financial and Capital Market Entities (Anbima), the emissions from the fixed income added up to more than R$91 billion last year, a record amount.

As a result, securitized products, which allow investors to lend money directly to companies linked to agribusiness or the real estate sector, have established themselves as an option for individual investors, who have exchanged shares for private credit securities.

However, before betting on these investments, it is necessary to measure the risks and gains.

What to look out for before investing in CRIs?

The partner and head of credit at Cy.capital, Danny Gampel, comments that whenever he indicates CRIs to individual investors, it is with direct investment in real estate funds and considering the profile of the products. Since there are several funds, ranging from the “high grade” to the more ‘high yields’.

“When the investor buys a CRI and becomes the holder of the paper, it will be difficult to trade that same asset on the secondary market in the midst of low liquidity”, he says.

Gampel points out that high-grade funds invest in assets from renowned companies in terms of credit, with a very good track record. While high yield funds are usually riskier and, consequently, higher return.

He adds that he also has the so-called “middle ground” fund, which are those that do not invest in companies that have a “very difficult balance sheet”, without guarantee security.

The next step, according to him, is to evaluate the characteristics of the assets, such as who the borrowers are, rates, duration, in addition to the lifetime value (LTV).

“These are details that help you identify, mainly, whether that fund will pay the rate and term you are willing to do,” he says.

Despite the jump in investments in financial instruments such as CRIs and CRAs, Gampel draws attention to the volatility of the real estate fund market, which depends on interest rates, inflation and other economic elements such as consumer confidence before betting on these financial market alphabet soups.

Precautions when investing in Fiagros

The head of products at B.Side InvestmentsEduardo Scheffer, draws attention to investments in Investment Funds in Agroindustrial Productive Chains (fiagros), which have been growing exponentially.

“It is important not to look only at the dividends the fund pays. Often, you have some extraordinary gain and the fund ends up either paying everything in one month or spreading it out over several months”, he ponders.

However, Scheffer points out that it is also important to observe the rate of return that these funds are paying. According to him, although the returns are better, if they are very high in relation to those observed in the debenturesfor example, incorporate a greater risk.

“The investor can also observe the duration, which, the smaller, the less the risk of the asset. Today, sectors such as retail, technology and some of construction are taking more risks”, he says.