NEW YORK - More than 100 industry participants attended a Latin America structured finance conference last week hosted by Moody's Investors Service.
According the rating agency, there were just 85 attendees at the same conference last year.
"There's just a lot of positive things happening in Latin America right now that could be good for the market," said one conference attendee after the event.
Mortgage securitization is an area with much promise for the years ahead, according to the speakers, and the topic garnered interest from Moody's clientele. One participant asked about bringing a cross border dollar-denominated deal backed by mortgages in local currency.
Challenges on that front include currency devaluation, which wouldn't effect the borrower but would impact the deal. Adding a currency swap counterparty would introduce counterparty risk.
Currently, the local markets seeing most of the action, as changes in regulation is allowing pension fund investors in many Latin American countries to access deals backed by local collateral.
"Lately, we've been seeing more local assets being sold into the local markets than off-shore," said Brigitte Posch, a Latin America ABS analyst at Moody's.
Moody's expects off-shore deals to pick up in the coming years.
"Latin American structured finance is sort of booming right now," said Moody's Everett Rutan, who spoke at the conference. "There are a lot of deals being worked on. More important, there are a lot of deals being closed."
Among other things, Moody's discussed its revised approach to sovereign ceilings on corporate credits, and the impact on structured finance transactions.
Essentially, the traditional idea behind the sovereign ceiling is that the sovereign basically has the ability to control all currency exchange. Moody's recently recognized that certain corporations, like certain types of debt, inherently have factors that make them priorities.
