Brazil CMN blocks FIDC exposure to lawsuits and court orders, R$64bn at risk

Brazil's National Monetary Council (CMN) has barred FIDCs (receivables investment funds) from holding assets tied to lawsuits and precatórios (court-ordered payments), affecting R$64 billion across 423 funds, with 232 funds having over 90% of their assets in such collateral. The rule was announced on the same day as a new phase of Operation Carbono Oculto, suggesting regulatory and enforcement pressure on these instruments. This could trigger forced selling or restructuring in the affected funds, impacting credit markets and investor confidence.