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STRUCTURED FINANCE: Going steady

Jul 1, 2012

Once shunned as the scourge of global financial markets, structured finance continues its comeback in Latin America – so long as the external environment permits

For a time, it seemed that structured finance would never recover from the taint it acquired during the financial crisis, which had seen securitization roundly lambasted for its role in the 2007-8 US subprime debacle.

But rumors of its death have been greatly exaggerated. Far from receding into obsolescence, structured finance is proving an ever-more valuable tool for emerging market borrowers - not least in Latin America, where issuance levels remain steady for both local and cross-border transactions.

And though the region's structured finance market is still in its infancy - and remains small compared to other emerging and developed regions - Latin America's relative resilience to the effects of the global credit crisis has meant that investors are increasingly eyeing up the region's asset markets.

That doesn't mean it's plain sailing. Jorge Unda, chief investment officer at BBVA Asset Management, says that the novelty of the structured finance marketplace...

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“The crisis has been a setback for reserve diversification."

Jan Dehn, Ashmore Investment Management