The domestic securitization markets of Mexico, Brazil and Argentina, which are the biggest in Latin America, should gradually recover in 2010, said Moody's Investors Service in its annual review and outlook report on structured finance in the region.
However, the rating agency does not anticipate a significant change in the level of Latin American cross-border issuance for 2010. This region saw volumes drop by 81%
in 2009, to become only 4% of the Latin American structured finance total.
In 2009, Latin American mortgage-backed and asset-backed issuance decreased an unprecedented 31% to approximately $13.5 billion from $19.5 billion a year earlier. Moody's says, however, that securitization volumes are already showing signs of recovery.
"Even with the high degree of uncertainty, we expect that more transactions will come to market based on the need for financing and investor appetite for traditional asset classes and robust structures, although the rate for growth in the local Latin American markets observed in prior years will be curtailed," said Victoria Moreno, Moody's vice president and senior analyst who wrote the report.
The demand for housing, especially in Mexico, Colombia and Chile, and industry's need for financing, should continue to drive mortgage securitization activity in Latin America, the rating agency said.
Transactions backed by mortgages in the region totaled approximately $4.6 billion in 2009.