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.
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
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
an 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.
get 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
comments came amid a backdrop of renewed optimism for the market – and with new
deals in the pipeline.
As 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 structurers.
BER Capital preps agri structuring company
Complexity, unfamiliarity, barriers to deeper LatAm structured finance market