In an effort to create a secondary market for ABS paper in Argentina, Banco Sudameris recently started posting an index of its structured notes on the local stock market. The bank started by listing the Fidens Trust, which is made up of two local MBS deals totaling the equivalent of $30 million, and hopes to list other deals in the near future.
"We are doing this in order to increase the liquidity of our paper," explained Fabian Pirrone, deputy director of capital markets at Sudameris. "We are trying to reach out beyond the institutional investors and appeal to the individual investor, who is less familiar with securitization. In our eyes, an index was the best way to bring our paper to smaller investors in a transparent and low cost manner."
Listing ABS offerings is compulsory according to Argentina's law. "Issuers list their securitized notes because they have to, not because they are trying to create a secondary market for their bonds," explained a local banker. "But they are listed haphazardly and there is no way to really follow their performance."
Sudameris' index is designed to solve this problem and increase the notes' visibility. "By grouping all the offerings together the volume looks more important and attracts the attention of analysts," explained a securitization researcher. "While other issuers' deals are scattered, the new index enables market watchers to follow the performance of Sudameris' notes."
Sudameris is one of the main players in Argentina's domestic securitization market. "The local market is expanding very rapidly," said Nora Trota, director of capital markets at Sudameris. "And by putting together this index we are trying to find new and better ways to further its development."
Though Sudameris' initiative is seen as positive, some argue that it will not be enough to spark a true secondary market for ABS paper.
"What Sudameris is doing could help some," said an official at Standard & Poor's in Buenos Aires. "However, what is really key for a secondary market in securitized paper is notes with longer maturities and a sustained volume of deals. It is a positive beginning for what is likely to be a long process."