Everything is ready for the "short" in private credit. All that's left is to gain the trust of the asset managers.

Expansing rapidly since the beginning of the decade, Brazilian fund investments in debentures have more than tripled since 2020, reaching R$ 770 billion. This position exceeds the industry's exposure to stocks by 18%.

But, unlike the stock market, where various hedging instruments exist, credit managers still lack effective tools to protect against potential devaluation of securities .

The publication of a technical guide by Anbima in the first half of June, aimed at standardizing the mechanics of these operations, promises to unlock this market.

This material, containing technical guidelines, included recommendations regarding the minimum content of a short selling contract and the so-called buy-in , the mechanism triggered when the seller fails to return the security on time, allowing the aggrieved party to repurchase the security on the market and claim the difference.

“Among asset managers, there is a naturally greater interest because funds have been able to short sell with this year's regulatory change. Furthermore, the growth of the private credit market and the current interest rate environment reinforce the demand for instruments that help in the negotiation and management of credit risk of securities,” says Eric Altafim, director of Anbima.

On the infrastructure side, B3 had already put the system online in February and activated the buy-in mechanism in May. "The tools are already available," says Leonardo Betanho, superintendent of OTC products.

In practice, however, a short selling market for credit does not yet exist in Brazil. A month after the tools were completed, not a single repurchase agreement with free movement has yet been registered on B3 – currently the only platform authorized to operate them.

According to Betanho, one of the reasons is the need for institutions to adapt to the new tool, especially fund administrators and custodians, who interact directly with B3's infrastructure. "They need to understand the tools to execute the operation," says the B3 executive.

At the end of last year, the National Monetary Council (CMN) issued Resolution 5,266, which came into effect in January of this year, making repurchase agreements with free movement more flexible.

The instrument paved the way for short selling in private credit by allowing the buyer of the security to freely resell it on the market during the transaction.

Repurchase agreements in private credit form a robust market, which, according to B3, moved R$ 6.6 trillion in 2025 — 98% of them backed by debentures, and the remainder by CRIs, CRAs and financial bills.

Without free movement of funds, these operations essentially served as a fundraising tool for banks. The institution would sell a security with the commitment to repurchase it days later, raise cash in the interval, and the client who held the security could not trade it.

The numbers don't add up?

But the real obstacle to short selling gaining traction in private credit lies not in the rules or infrastructure, but in how the account is closed. Market professionals interviewed by NeoFeed say that the distrust stems from the practicality of the instrument: the fixed income market still grapples with price inconsistencies and low liquidity.

Globally established in the stock market , short selling moves hundreds of billions of reais every year. On the B3 (Brazilian Stock Exchange), the volume traded with securities lending — one of the conditions for setting up short selling — was close to R$ 350 million in 2025.

In private securities, however, part of the uncertainty managers feel in setting up this type of operation is due to the mark-to-market effect — which doesn't exist in stocks.

While on the stock exchange the price of a share is observed with each transaction, in private credit most debentures go days without changing hands. As a result, the "market price" ends up being a value calculated by methodology, not the result of a recent transaction.

Arnaldo Braga Neto, partner and head of credit at Neo Investimentos, believes that short selling represents an evolution in the market, as it allows betting against an expensive stock instead of simply holding it. However, he is concerned about the pricing.

“Who says the rate isn’t CDI plus 1, but CDI plus 2? Is this market research?” he questions. “Every time you create a derivative product and it’s going to generate a positive or negative result based on a price valuation, you need to be very sure that that price is fair, that it reflects reality, and that it can’t be manipulated.”

Rodrigo Amato, from Laqus — a competing registrar to B3 — points out that very few private credit securities have daily trading, which makes mark-to-market valuation an exercise in calculation, not observation. "Mark-to-market valuation typically derives from methodology, not from transactions," he says.

In the absence of frequent transactions, the reference price deviates from Anbima's methodology, which publishes daily values for a basket of the most liquid securities. Outside of this group covered by Anbima, two administrators may arrive at different prices for the same debenture. "Whoever sold will want to mark it down; whoever is receiving the money, up," says Amato.

The opacity lies not only in the frequency of transactions, but also in the timing of their occurrence. Paulo Fernando Machado, credit manager at Drys Capital , points out that the official price of a debenture is only known after the market closes – which prevents tracking, throughout the day, how much it would cost to repurchase the security to unwind a short position.

“Sometimes the information you see being circulated is about a deal made yesterday, but only registered today,” says Machado. “The transparency of information inherent in the organized over-the-counter market needs to improve significantly for this type of operation to gain traction.”

The bottleneck and the problem

Those who propose to solve this bottleneck see the same problem. André Duvivier , CEO of SL Tools — a competitor of B3 in the organized over-the-counter market for private credit — says that short selling depends on a visible price, which does not exist today. "Determining the correct price is the problem, because you're not seeing the price," he states.

Even though he's part of the infrastructure for this market, Duvivier doesn't see any demand appearing. In the last two weeks, he met with two treasurers from large credit houses, and the possibility of short selling "wasn't even mentioned." "There are plenty of assets out there that nobody uses," says the CEO of SL Tools.

Machado, from Drys, believes that the low demand is fueled by the very lack of the product. "Today I don't see real demand, but it's largely because nobody is wasting time analyzing it. Since you can't make money, you're not going to do that analysis," he says. "You have to start having people making it, making money, having funds cooperating."

To reduce risks, B3 has only authorized the operation for debentures and intends to extend it to other assets only after the market tests the format. According to Betanho, the expectation is that the first operations will focus on the most traded securities, those easiest to locate when repurchasing and returning them.

The underlying plan, according to the director of B3, is to make private credit as electronic and transparent as the stock market. "We would like to see a market where trading takes place on a platform, with whole numbers for debentures, CRIs, and CRAs," says Betanho.

Rivals in the organized over-the-counter market, B3 and SL Tools converge on the diagnosis: short selling will only move forward when debentures cease to be traded, in large part, by phone, email, and spreadsheet. "The CMN (National Monetary Council) did its part, it removed a problem. We need to do ours," says Duvivier.