Fitch Ratings expects structured finance in Latin America to see stability in issuance and its credit environment, despite the regulatory difficulties that have been afflicting the sector in Brazil.
“Latin American SF has performed well historically, even in turbulent times, uniquely emerging from the financial crisis relatively unscathed,” said Greg Kabance, a managing director at the agency.
A scathed exception was the business of construction bridge loans in Mexico. Liquidity-starved originators, defaults and even fraud led to a collapse in the sector. Making smaller ripples were consumer loan deals in Brazil that were hit by mid-tier bank failures.
But in the wake of the global financial crisis, the region overall fared better than many other more developed geographies. Fitch said that, from 2008 through 2012, upgrades in structured finance outstripped downgrades by a factor of 1.3x, if Mexico is taken out of the equation.
While weighing on issuance, regulatory developments in Brazil would build a more stable foundation for the securitization market there, in Fitch’s opinion. “[They] promote greater transparency [and] restore appropriate ‘checks and balances,” the agency said.
Issuance of Latin American structured finance deals totaled $17.2 billion last year, a drop from the $24.3 billion peak in 2010.