A recent bond deal by Peru's Universidad de San Martin de Porres proved to be an education for the academic issuer. At first, the college was keen to float a tuition-backed deal, more or less along the lines of the Chilean universities that had done so in 2003. But arranger BBVA Banco Continental concluded that a straight securitization was not a good idea.

"The only future flow deals in Peru have been done by companies that were financially weak," said Julio Montoya, head of capital markets at BBVA Banco Continental, citing one disincentive. But more importantly for the health of the transaction was that, in Peru, regulators overseeing a securitization don't interact with the originator. "In a securitization, Conasev [National Supervisory Commission on Companies and Securities] only deals with" the trustee, Montoya said. That approach, he added, could jeopardize the risk of a future flow deal, where the ongoing performance of the originator plays a critical role. "From our point of view, this would not be giving the complete information to investors," Montoya said.

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