Morgan Stanley to Follow Goldman in Bet on Brazilian Fintech

Morgan Stanley is following Goldman Sachs Group Inc. in lending to Brazil’s booming fintech industry in search of higher yields, according to four people with direct knowledge of the matter. Morgan Stanley bought about 50 million reais ($14 million) in local subordinated bonds from Geru Tecnologia e Servicos SA, an online lender to individuals. Financial-technology startups have boomed in Brazil as digital newcomers target big banks. About 210 such companies are operating in Brazil. Helping to finance the startups can be lucrative for the banks. The Geru bonds, issued in December with a four-year maturity, pay 175 percent of the interbank rate DI, or around 11.2 percent annually. That’s a better return than available on, for example, four-year bonds sold last month by Brazil’s Raia Drogasil, a pharmacy chain, which pay about 105 percent of the interbank rate. Geru and Morgan Stanley declined to comment on the bond purchase.

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