Last quarter, Latin America took only two securitizations abroad. Brazil's and Mexico's domestic markets, meanwhile, cemented their reputations as the region's true magnets of activity.

But let's give the cross-border its due. Foreign issuance from the region has always waxed and waned, and there are interesting stories behind and beyond the so-far skimpy numbers.

One is that existing asset deals have eased into their third year of recovery. Both transactions that came out in the first quarter were backed by mortgages, an asset class anathemized during the Argentine defaults of 2002. Su Casita, one of the Mexican originators that will be popping into foreign markets now and then to sate their ravenous appetite for funding, issued a local currency tranche on top of a dollar one.

But the post-Argentina existing asset deals are still in diapers, and as anyone knows, toddlers will stumble and fall. In January, Metrofinanciera bought back what was left of a $210 million deal backed by construction bridge loans, dissatisfied with the amount of excess cash flowing from the structure back to the company.

On the future flow side, there was indeed nothing. And nothing is what we're likely to get from one former font of liquidity: Brazilian exporters. They're not going to bother with a structured finance deal when other forms of funding are so easy to tap and cash flows so generous. If there's anything related to future flows in the cards, it'll come from a smaller country, like one in Central America or Peru.

In step with their exporting brethren, Brazilian banks have recently been enjoying access to financing alternatives that are more economical than securitization. What's different is that they've also been tapping their diversified payment rights, but doing it quietly. The word is that they've been replacing wrapped deals with unwrapped ones.

"What was triple-A pricing a few years ago is now triple-B, so they save the cost of the wrap," one market source says.

Naturally, that's trimmed monoline exposure in Brazil. And with the domestic market not yet up to snuff for most monolines, that exposure isn't heading back up anytime soon.

(c) 2007 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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