Reel coming soonPaper FIIs: index, spread, collateral, ratingshort video · 9:16IntermediateBrazilian REITs · Lesson I4.7 · Module I4
Paper FIIs: index, spread, collateral, rating
Module I4: Analysis indicators
In this lesson
- CDI+ or IPCA+
- LTV and the auction test
- Spread, high grade and high yield
Brazilian REITs · Lesson I4.7
The fund that lends instead of leasing
Four questions size up a CRI without making you a credit analyst.
A CRI's label
A CRI's rate has two parts
- LTV 60%
- 5-year term
- fiduciary lien
- receivables assignment
- reserve fund
- co-obligation
Next to the rate, check LTV, term and collateral. CRI = Brazilian real estate receivables certificate.
Index
CDI + or IPCA +?
CDI + 2%
16.2% a year
- Tracks the Selic rate
- Pays less when rates fall
IPCA + 7%
11.8% a year
- Tracks inflation, month by month
- A deflation month cuts that month's income
Illustrative assumptions: CDI 13.9% and IPCA (Brazil's CPI) 4.5% a year. The Selic stood at 14.00% in 09/2026.
A R$ 100M portfolio
Half in each index
Rate and spread compound: (1.139 × 1.02) − 1 = 16.2%.
Collateral
LTV: how much the collateral covers
The lower the LTV, the bigger the cushion if the borrower stops paying.
The auction test
The collateral sold 30% below appraisal
R$ 60M debt: R$ 10M left over. R$ 85M debt: R$ 15M short — and the loss hits all at once.
Spread and rating
A high spread pays for high risk
High grade
Lower spread
- Solid borrower
- Low LTV and strong collateral
High yield
Higher spread
- Weaker borrower
- Pays more because it might not pay
A rating helps, but it isn't mandatory and doesn't always exist.
Remember this
Three takeaways
- The index drives incomeCDI follows the Selic; IPCA follows each month's inflation.
- LTV measures the cushionDebt ÷ collateral. The lower it is, the more is left at auction.
- Paper can lose tooWhen the borrower stops and the collateral doesn't cover it.
Quick quiz · 1 of 2
Two CRIs pay the same spread; one has a 50% LTV and the other 90%. Which is riskier?
See answer
LTV 90%. If the collateral is worth just 10% less, it no longer covers the debt. And it pays the same spread for more risk.
Quick quiz · 2 of 2
A CRI with a R$ 45M balance and a R$ 50M pledged property. What is the LTV?
See answer
R$ 45M ÷ R$ 50M = 90%. Thin cushion: an auction 10% below value wipes it out.
Lesson complete
Next lesson
I4.8Intermediate · Lesson I4.8Leverage: when the fund owes moneyDebt doesn't shrink: the whole property drop lands on shareholders.Continue1 / 11
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- Blogtrepreneur · Wikimedia Commons · CC BY 2.0 — Wikimedia Commons
- Gaf.arq · Wikimedia Commons · CC BY-SA 3.0 — Wikimedia Commons
Educational content, written for learners. Not investment advice.