Russian Structured Finance Investment Forum
1. Evolution of the Latin American Securitization Market 3
2. Country Specifics 5
3. Investor Base 10
4. Next Steps 12
Evolution of the Latin American Securitization Market
Evolution of the Market
§Future Flow Beginning. In the beginning, the Latin American structured finance market was
dominated by future flow transactions secured by assets denominated in foreign currencies.
Given the relatively low ratings of most Latin American sovereigns, this form of financing was
only available to the biggest, most creditworthy originators within each country. The main
assets securitized in this fashion were:
•Receivables backed by future exports
•Financial future flows generated by credit card vouchers or payment rights
§Growth of Local Markets. As the Latin American structure finance market has progressed,
we have witnessed the emergence and increased issuance of existing asset securitizations in
local currencies placed within their domestic capital markets. This has allowed less
creditworthy originators to achieve relatively low-cost financing through securitization.
2003 Latin American Securitization 2004 Latin American Securitization 2005 Latin American Securitization
(total issuance US$ 8.1 billion) (total issuance US$ 10.9 billion) (total issuance US$ 14.5 billion)
§Domestic Issuance Growth. Total issuance volume has increased dramatically in Brazil, as
issuance was up almost 140% in 2005 compared to volume in 2004:
§Diversification of Asset Type. The assets underlying Brazilian securitizations have been
diversified significantly over the last several years.
2005 Brazilian Domestic Securitization (by asset type)
§Domestic Issuance Growth. Total issuance volume in Mexico surged in 2004 and 2005.
Issuance declined slightly in 2005, but this was due mainly to a reduction in issuance in credit-
linked obligations and is not representative of a decline across all asset classes:
§Real Estate as Important Asset Type. Real estate issuance continues to be strong in
Mexico and represents the largest asset type in terms of issuance besides the credit-linked
2005 Mexican Domestic Securitization (by asset type)
§Domestic Issuance Growth. Total issuance volume drastically increased in 2005 as
compared to 2004 and has now surpassed pre-crisis levels:
§Personal and Consumer Loans as Important Asset Type. In 2005 several finance
companies, home appliance stores and banks established securitization as their principal
source of funding, which explains the large personal and consumer issuance volumes:
2005 Argentine Domestic Securitization (by asset type)
§Domestic Issuance Growth. Total issuance decreased substantially in Columbia in 2005
compared to 2004. The main explanation for this decrease is the decreased issuance by
Titularizadora Colombiana, which dominates the Columbian mortgage market:
§Titularizadora Colombiana Mortgages. Titularizadora Colombiana was the main issuer in
the Colombian domestic market, accounting for almost 70% of issuance in 2005:
2005 Columbian Domestic Securitization (by asset type)
§Local Markets. As existing asset securitizations have taken a firm hold on the
Latin American securitization market, the local capital markets have grown and
become more sophisticated.
§International Markets. Issuers from Latin American have begun to seek
international investors in their securitizations. Up to this point, cross-border
issuance in local currency has only been done with construction loans; however,
it will be interesting to see how long it will be before other assets are also taken
to the international markets.
§Future Development. As the Latin American securitization market continues
to grow, there are several steps that must be taken to encourage future
§Brazil should look to expand further into the consumer loan cross-border market
§Brazilian mortgages are currently inside government treasuries, thus limiting the
investor base. In order to further develop the Brazilian market, we must work to
find ways to make mortgage backed securities more attractive to investors.
§Mexican issuers have already tapped international investors on construction
loan transactions. In order to continue developing the Mexican market, issuers
should look to place other assets types with international investors as well.
§Mexican mortgage issuers should look to increase warehouse lines for both
residential and constructions loans in order to enhance their sofol balance sheet
§The Mexican market as a whole should begin to concentrate on assets other
Head of Latin American Securitization
Deutsche Bank Securities Inc.
Securitized Products Group
Tel: (212) 250-4551