deepening of Latin America’s structured finance
markets will require greater involvement from multilateral
institutions in extending guarantees and the introduction of
international best practice, investors have said.
Some institutional investors lack
familiarity with the format of deals from the region, issuers
and investors said at the LatinFinance Securitization
and Structured Finance in Latin America conference this week.
Given the small size of many deals, it can be tough getting
investors interested enough to do credit work.
Traditional financing for construction was from banks -
institutions that can understand, evaluate and price the
risk, tasks that are more difficult for bond investors, Mike
Morcom, director, head of Latin American agency & trust
sales, Citi, told LatinFinance. "One of the challenges
for deals with construction risk is finding sufficient investor
education process. Institutional investors, the buyer base in
the US, they've come up to speed on other asset classes. At
some point they do get to understand and are able to price that
kind of risk," he said.
added that while deals have been completed with "varying
degrees" of construction risk, "we need the investor base to be
more knowledgeable in able to price that risk as it will allow
more project bonds to get done."
Rauschkolb, CEO of Panama-based mortgage lender La Hipotecaria
told the conference that guarantees from multilaterals helped
international investors get comfortable on buying well rated,
but small, securitizations from his institution.
somebody from New York to understand what a Salvadorean
mortgage is all about is a challenge," he said.
guarantees allowed US investors to become comfortable on
transactions without putting in extensive credit work for a
small deal size, he said.
Martin, operations director at investment firm Absalon,
meanwhile, said home lenders in Mexico and Brazil should
consider the principals behind the Danish covered bond model.
These included a regulated process to review operations, a
liquid secondary market.
comments came amid a backdrop of renewed optimism for the
market – and with new deals in the pipeline.
LatinFinance reported, Corporacopm Andina de Fomento
is working on a collateralized debt vehicle, while in Brazil
the market for agribusiness securitization is expected to
increase markedly this year, attracting new
BER Capital preps agri structuring company
unfamiliarity, barriers to deeper LatAm structured finance