Monday, 26 January 2009

Fitch Sees Challenging Year for Latin America Structured Finance Industry. Nothing New

Fitch Ratings issued a report dated Jan. 23 on regional structured finance trends, focusing on Mexico, Brazil and Argentina -- the big three in the region. According to the ratings company, in the past three or four years, Latin America witnessed significant credit growth in most segments of the economy, from consumers to corporate lending. ''The 2008 market turmoil that followed and the ensuing liquidity crisis created dislocations to varying degrees across the major structured finance markets,´´ says the report.

Fitch asserts that no sector will be immune to fallout in credit markets. ''Certain individual market sectors´´ will remain resistant ''such as cross border future flows and Mexican bank originated residential mortgage backed securities,´´ Fitch said.

Last year, Fitch affirmed approximately 616 tranches from its securitisation portfolio, upgraded 44 and downgraded 61 -- defining it as a ''balanced year´´ for the region. ''Overall, recognizing the regional challenges exacerbated by a subdued capital market, lower commodity prices and limited growth, Fitch expects Latin America to have an increase in the ratio of negative to positive rating actions in 2009 compared with 2008.´´ So, dear reader, be ready for the wave of downgrades in FIDCs, mortgage-backed bonds, securitisations of loans and credit card receivables etc., especially in Brazil and Mexico. We will try to write more about these actions when we have access to ratings decisions.

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