In Brazil, talk of a more substantial RMBS market might be a step closer to reality, as banks will be able to use a portion of their securitized portfolios to meet a regulatory requirement that has been an impediment to RMBS issuance in the country, said Fitch Ratings in a report today. Under the rule, banks must keep 65% of savings deposits in real estate-related financings. With the change, “Fitch expects some large retail banks to debut new RMBS securitization platforms in 2011.”
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In the same report, Fitch estimated that total structured finance issuance in Latin America — on both the domestic and cross-borders sides — reached $24.2 billion in 2010, handily beating the agency’s figure for the last record of $19.0 billion in 2007. In the aggregate, the agency sees a more or less steady 2011 across the region, with a few exceptions, notably the struggling housing sector in Mexico.
Nevertheless, Fitch expects the ratio of negative-to-positive ratings moves across the region to edge down from 2:1 this year. In 2009, the ratio was 7:1, as a number of sectors got hammered by the global crisis.
The agency pointed out that escalating drug-related violence in Mexico could hurt growth this year by sapping confidence and investment. Still, the RMBS sector is unlikely to endure much more damage. While delinquency levels are likely to keep rising for deals denominated in UDIs (an inflation index) and originated by Sofols (nonbank lenders) in the first of the year, better job and GDP figures, combined with a loan modification program and better collection efforts, should help stabilize the sector in the second half.
As for the other ABS sectors in Mexico, for this year, Fitch is eying potential deals backed by consumer loans, CMBS, equipment leases and trade receivables.