Every real-world-asset pitch is a photograph of the collateral. Grain in a warehouse, an invoice, a solar farm—real, custodied, a senior claim you can point to. What the deck almost never prices is the other side of the trade: the money. Where does it come from, in what currency, at what hurdle rate, and who buys the collateral on the worst day?
A tokenized RWA deal is not an asset. It is a cross-border secured loan wearing a token, and whether its economics close is decided by four levers—three of which have nothing to do with the collateral at all. Our agriculture series took one asset class apart to the bone: the instruments and rates, the required investor yield, the token structure, and what a default actually recovers. This article is the level above that: the funding-side framework those pieces are a worked example of. The numbers below use Brazilian soybean credit because that is where we have measured them, but the four levers transfer to any physical-asset financing—receivables, commodities, equipment—unchanged.
Market anchors used throughout, dated to avoid the usual sleight of hand: CDI 14.15%, Selic 14.25% (Copom, 17 Jun 2026), SOFR 3.63% (20 Jul 2026), and a CME-implied BRL depreciation of about 7.5 percentage points per year (settlement, 22 Jul 2026).
The pitch shows one side of the balance sheet
A financing deal has two sides. The asset side is the collateral and the yield it can support—the part every RWA deck renders in high resolution. The funding side is where the capital originates, the currency it is raised in, and the return the supplier of that capital demands. The asset side answers “is this secured?” The funding side answers “does anyone make money?"—and it is almost always left blank.
The reason is that the asset side is photogenic and the funding side is arithmetic. But the arithmetic is where deals die. A tokenized instrument secured by first-rate collateral still fails if it is funded in the wrong currency, priced against the wrong benchmark, or handed to investors whose hurdle rate is set by something you are not offering. Four levers govern that arithmetic.
Lever 1: slice the risk before you price it
The first mistake is financing an asset’s entire life at one rate. Most physical goods have two economically distinct phases: a creation leg, where the thing is being produced and can still fail, and a holding leg, where it already exists and is merely waiting to be sold. These carry completely different risks, and blending them into a single instrument makes the safe phase subsidize the risky one.
Soybeans make the split concrete. The production leg runs from input purchase through harvest—roughly eight months of financing exposure, of which the crop itself stands in the field for about four—and it carries the weather, crop, and execution risk. That leg is financed today at 18–27% in local currency by banks, input-supplier barter, and subsidized quota lines, and it should be: someone has to carry the risk that the crop fails. The storage leg is different in kind. The grain now physically exists, has been graded, is insured, sits in a warehouse under a collateral manager, and is two to four months from sale. Financing it at a rate that includes a weather premium means, bluntly, making the storage months pay for weather that can no longer happen.
Price only the second leg and the number moves hard:
- A 9–12% USD product over a 4-month storage leg costs 3.0–4.0% for the period
- The local free-market CDA/warrant discount runs 1.3–1.8% per month—5.2–7.2% over the same four months in BRL, or roughly 3.2–5.5% once converted to USD-equivalent (Lever 2)
- Same collateral, same months: the honest gap is about a point at the midpoint, and it closes entirely at the cheap end of the local market
- Most of what looks like a discount is currency. What the leg split actually buys is a shorter tenor and no weather premium—price it in one currency or you will book an FX spread as if it were credit skill
The generalizable rule: find the point in the asset’s life where the risk you are paid to carry actually begins, and lend only from there. For grain it is the warehouse door. For receivables it is acceptance of the invoice, not the signing of the contract. For equipment it is commissioning, not manufacture. The leg you decline to finance is not lost business—it is risk you were never equipped to price.
Lever 2: no rate means anything until it is in one currency
The second lever is the one that quietly wrecks comparisons. A BRL rate and a USD rate are not comparable numbers, and any deck that puts them side by side is borrowing a spread that belongs to the currency. Covered interest parity is the correction:
- depreciation_forward is the market-priced annual decline of the funding currency, not the naive rate gap
- The Selic−SOFR gap is ~10.6pp (14.25% − 3.63%), but the priced-in BRL depreciation is only ~7.5pp
- The difference exists because Brazil’s DI curve already prices Selic cuts toward 11–12% over the year, so the forward does not extrapolate today’s peak rate
This refines a number we published ourselves. The agri-debt-yield article used the static shortcut—full hedge cost ≈ CDI − SOFR ≈ 10.5%—to show where the “5–7% in dollars” myth comes from. The CME forward curve as of 22 July 2026 prices less: −1.3% at two months, −2.5% at four, −7.5% at twelve, −10.7% at seventeen. Using the forward rather than the rate gap raises the USD-equivalent of every local alternative, which makes a dollar product look more competitive on the borrower’s side, not less. Honesty compounds: the static shortcut overstated the hedge, and the live curve corrects it.
Run the whole borrower ladder through the correct conversion and the target segment becomes obvious:
| Borrower channel | Local rate (BRL) | USD-equivalent | Read |
|---|---|---|---|
| Subsidized quota lines | 9–14% | ~1.5–6.5% | Unbeatable—but quota-capped and exhausted early each cycle |
| Prime farmer, private market | 18–20% | ~10.5–12.5% | At parity with a 9–12% USD product |
| Thin-file / frontier / stressed | 24–28% | ~16.5–20.5% | The real edge (upper end reads off distressed-paper pricing, not quoted farm loans) |
| Farmer all-in cost (with fees, insurance) | 30–40% | ~22.5–32.5% | Where the product wins outright |
A 9–12% USD instrument has no edge against subsidized credit and only a marginal one against prime borrowers. Its entire addressable market is the tail paying 20%+ locally or shut out of credit entirely. That is the discipline, not a disappointment. The lever tells you exactly which borrowers a dollar product can and cannot serve, before you spend a cent originating.
Lever 3: the funding currency is a choice, and cheap money is usually a mirage
If dollars are expensive, why not raise cheaper money elsewhere? Brazil sells about 85 million tonnes of soybeans a year to China—roughly 80% of its shipments, and 73.6% of China’s soy imports—and Chinese domestic funding is priced far below both BRL and USD. The temptation is to fund the book in renminbi at 2–3% and pocket the difference.
Covered interest parity kills that arbitrage the moment you hedge:
- Forward curves are not independent: (1 − 7.45%) × (1 − 2.80%) = (1 − 10.04%)
- USD funding hedged into BRL: 3.6% + 7.45% ≈ 11.05%
- CNY funding hedged into BRL: 2.0% + 10.04% ≈ 12.04%
- Both land below CDI (14.15%) only because the forwards price Brazilian rate cuts—and within ~1pp of each other
Hedged, the cost of money is very nearly currency-invariant—a persistent cross-currency basis of a few tenths of a point is the only residue, nowhere near the spread the pitch implies. Anyone pitching cheap Chinese capital as a rate story is quoting the unhedged number and hoping you do not check. The renminbi only wins where the borrower has genuine same-currency revenue to repay from—so the hedge is unnecessary—and that condition holds at the exporter or the SPV that sells to China, never at the farmer.
But that exception is where the interesting structure lives. Follow the grain: the storage leg is exactly the point where the soybeans already exist and are already destined for a Chinese buyer. If that same buyer prepays in renminbi against that same cargo, three things collapse into one entity—financier, liquidator, and offtaker become the same party. The funding is real renminbi at roughly 3–5% all-in, repaid from renminbi export proceeds with no hedge required and, under current rules, zero IOF and zero withholding on export prepayment. And the liquidation risk that a dollar structure prices by lining up a grain desk to bid on seized lots simply disappears—the lender is the buyer.
The consequence reframes the whole business. When the offtaker funds the deal, the operator’s revenue stops being a credit spread over an 11–12% required investor yield and becomes an origination and servicing fee over a ~3–5% cost of funds. The P&L flips from interest-based to fee-based. This is not currently a signed structure—no precedent exists for renminbi-denominated prepayment funding farm-level credit in Brazil, and that gap is the single load-bearing assumption—but it is where the currency lever stops being defensive arithmetic and becomes a different product.
The deeper point generalizes past soy and past China. Currency choice is not a rate decision; it is a decision about who your capital provider is and what they are actually buying. A crypto allocator prices your paper against 25%-plus tech-revenue-backed credit and finds 9% boring. A strategic offtaker prices the same paper against a 2–3% domestic alternative plus the value of securing the cargo, and sees a large pickup. Identical asset, opposite verdict—because one is buying yield and the other is buying supply security. Know which one you are underwriting to.
Lever 4: the liquidation path is the yield
Secured lending’s real question is not the loan-to-value ratio. It is who buys the collateral on the worst day, at what discount, and how fast. An LTV ladder is a promise about coverage; the liquidation path is whether the promise pays out.
A defensible structure names it as an instrument. The reference design runs a 50% launch / 60% target / 80% ceiling advance ladder against a standby purchase commitment: a grain desk of the Trafigura/Bunge/LDC class agrees to buy seized lots at a 15–20% discount to the published spot reference, within 24–72 hours, in minimum lots of about $1M. If that commitment is real, a loan advanced at 50–60% against collateral that liquidates at 80–85% of spot cannot lose principal at full liquidation—the discount is absorbed inside the coverage buffer.
The word doing the work is if. Today that standby is a mapped design parameter, not a signed commitment, and the honest version of the pitch says so. The gap between the two is the entire difference between a senior claim and a recovery. Our AgroGalaxy post-mortem is the empirical version of this lever: in Brazil’s largest agri insolvency, unsecured creditors took an 85% haircut, and the protections that held were exactly the ones with a real enforcement path—segregated estate, clean fiduciary title—while group guarantees, covenants, and ratings recovered nothing. Collateral that cannot be sold quickly is not collateral. It is a story about collateral.
The generalizable rule: a secured RWA yield is only as real as the signed buyer standing behind the collateral. Price the standby as a line item, not an assumption. If no one has committed in writing to buy the asset in a fire, the LTV ladder is decoration.
Putting it together: reconciling the two numbers
A reader who lands on both this page and the agri-debt-yield article will notice a tension. That piece prices the honest required yield for senior USD exposure at about 12.25%. The deals in this one are structured to offer the borrower 9–12%. If investors demand 12.25% and borrowers pay 9–12%, the rail’s spread is negative. Which number is wrong?
Neither—they price different objects, and the four levers explain the whole gap:
- Different risk (Lever 1). The published 12.25% reference case is a 180-day, single-name warehouse claim at a 70% advance rate. The 9–12% offer prices a shorter, lower-advance slice of the same storage leg—2–4 months, grain already graded and warehoused, low advance rate. The credit, collateral, and liquidity layers that build 12.25% legitimately compress on the shorter, safer slice.
- FX correction (Lever 2). The 12.25% is an unhedged USD build, so no hedge assumption touches it—but the live 7.5pp forward (against the old 10.5pp) raises the USD-equivalent of the local BRL credit the borrower would otherwise take, which is what lets a 9–12% USD offer clear against that borrower even while investors require ~12.25%.
- Insurance and DFI. The same article already prices an insured senior tranche near 11%; a signed liquidator standby plus credit insurance pulls the requirement toward the top of the 9–12% band.
- Funding currency (Lever 3). Offtaker prepayment replaces the investor-yield frame with a fee-based one—a servicing fee over ~3–5% funding—which sidesteps the 12.25% hurdle entirely.
The spread exists only when you pull all four levers: finance the safe leg, price the currency with the live forward, obtain a signed liquidator, and match the capital provider to the asset. Skip any one and the negative-spread reader is right. Run the yield build-up yourself and watch how many layers have to compress before a sub-12% offer prices fairly.
The honest gaps
A framework that only shows the upside is a pitch, not an analysis. Four things are unresolved in even the best-structured version of this deal, and any real diligence starts here:
None of these is a reason not to build the rail. They are the reason to price it honestly—which is the whole point of separating the funding side from the photograph of the asset.
Pricing an RWA financing structure?
We build the funding-side economics for specific deals—the leg to finance, the currency to raise in, the liquidator to sign, and the yield each choice implies—anchored to dated market evidence. Useful before a coupon goes on a term sheet.
Get in touchThe takeaway
A tokenized real-world asset is a loan, and a loan is priced on its liabilities as much as its collateral. Four levers decide the economics: slice the risk and finance only the leg you can price; convert every rate into one currency with the live forward, not the rate gap; choose the funding currency by matching the capital provider to the asset, knowing that hedged money is currency-invariant; and treat the liquidation path as a signed instrument, not an LTV assumption. The collateral is the part everyone can see. The reason most RWA pitches never close is that the money—where it comes from, in what currency, and who buys it back in a fire—is the part they leave off the slide.