See alternatives in fixed income after changes in LCI and LCA – 02/25/2024 – Market

At the beginning of February, the federal government changed the rules for new issuances of LCAs and LCIs (agribusiness and real estate letters of credit), in order to increase the minimum redemption period and reduce the backing options for these instruments.

The objective is to increase the Union’s revenue, reducing the possibilities of use, both by issuers and investors, of these instruments that are exempt from Income Tax. Similar changes were also applied to CRAs and CRIs (certificate of real estate and agribusiness receivables).

Now, the funding instruments will have to be directly linked to the sectors for which they are intended, without companies that are not in the sector issuing the papers, as happened in the past with the CRA of the Burger King operator in Brazil, issued to finance the purchase JBS burger by the fast food chain.

According to experts, the result should be a smaller supply of these products due to the reduction in the scope of possible issuers. Furthermore, the increase in the maturity period may generate a higher return on the securities.

“But there shouldn’t be a drastic change in rates, as the product already has advantages over the rest of the market”, says Eduardo Dotta, professor of financial capital market law at Insper.

In addition to the IR exemption, LCIs and LCAs have protection from the FGC (Credit Guarantee Fund) in case of default by the issuer.

Products that were issued by January 31, 2024, with the old rule, should appreciate in value on the secondary market, says Dotta, which could make selling to third parties, before the redemption deadline, attractive.

Changes to LCIs and LCAs

In the case of LCIs, the minimum grace period increased from 90 days to 12 months. Real estate bills adjusted monthly by a price index, such as the IPCA, continue to have a minimum maturity of 36 months.

For LCAs, the minimum of three months was increased to 12 months, when the bill is updated by price index, and to nine months in other cases.

Longer redemption periods inhibit the use of these instruments by companies that need to protect their cash from inflation for a short period, without paying taxes. The same goes for investors who used the instruments as an emergency reserve.

In this case, alternatives with a similar level of risk are CDBs from large banks, which pay around 100% of the CDI (which follows the Selic), fixed income funds and Treasury Selic, all with daily liquidity and income tax charges.

For those who do not need to use the money invested in the very short term, LCIs and LCAs continue to be very advantageous to investors, analysts say.

“Does the investor really need to change and replace [as letras por outros produtos]? The change in deadline is not drastic”, says Marlon Glaciano, financial planner and finance expert.

According to a survey by Rafael Haddad, financial planner at C6 Bank, such bills are one of the most profitable options in fixed income currently. With the market average of 96% of the CDI, he calculates that the three products would have a real net profitability, that is, discounting income tax and estimated inflation, of 5.55% in the next 12 months.

The projection already includes the fall in the Selic priced by the market. Today, the basic interest rate is 11.25% and the forecast is that it will end 2024 at 9%. On average, the interest rate for the next 12 months would be 10.09%, calculates Haddad.

The 5.55% offered, on average, by bills exceeds the real net profitability of 3.84% for savings and 4.22% for the Treasury Selic due in 2027, both with daily liquidity.

To get closer to the rate offered by bills, it is necessary to look for instruments that cannot be redeemed at any time, as is the case with pre-fixed CDBs with annual interest of 11.20%.

Or, go for riskier products, such as CDBs from medium and small banks, which pay 112% of the CDI per year, and incentivized debentures (with IR exemption), whose profitability is similar to that of bills, but the deadlines and default risks are greater.

“Now, liquidity has become an important guide. The investor will have to have more wisdom to diversify”, says Marlon Glaciano, financial planner and finance specialist.

He recommends adding Treasury ETFs (index funds) to your portfolio, which are traded on the Stock Exchange in the same way as shares. “In addition to the appreciation of the security, you can gain from the rise in the American currency”, he says.

Another instrument recommended by the specialist are multimarket funds, which combine different types of fixed and variable income assets.

But there are no instruments on the market that are exactly equivalent to LCIs and LCAs. “Every product exempt from income tax with our interest rate is wonderful. It’s difficult to find a product like this outside of Brazil”, says Glaciano.