Real Estate Secured Bill

  • The product

    The Real Estate Secured Bill (LIG) is a mortgage-backed bond that can be issued by banks, savings banks, credit loan or investment societies, mortgage companies, and savings and loan associations. The LIG was created to promote the real state loans in Brazil and is based on the model known abroad as covered bonds. The LIG is backed by a separate portfolio of assets that secure the bond and are segregated from the issuing institution.

    As well as being exempt from income tax for local and foreign investors, the LIG breaks new ground compared to other market funding instruments as it carries a possible profitability linked to the exchange rate variation. It is also the only bank funding security whose payment will not be automatically interrupted in case of bankruptcy of the issuing institution. If this happens, the asset portfolio will provide the payments owed to investors and the trustee will take over the management of the bond and the asset portfolio.

    During the term of the LIG, the trustee watches over the interests of investors by monitoring the conditions of the bond and the asset portfolio.

    As provided for by law, the LIG must be deposited in a central depository authorized by the Central Bank of Brazil. Therefore, B3 maintains full control of the LIG trading chain, providing transparency and investor protection in relation to the issuance of this bond.