The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Structured finance: Brakes on Brazil’s ABS market

Record liquidity stymies growth of securitization.

Many Latin American borrowers, particularly in Brazil, are still stymied by high borrowing costs. One way that Brazilian companies have historically reduced these costs has been through securitization. So it’s only natural that many capital markets companies in Brazil are eyeing the ABS market, wondering if and when it might take off.

Local securitization points the way ahead
Volume of deals
Source: Fitch Ratings

The problem is that securitization doesn’t seem to help Latin corporates very much. Interest rates are high not because the companies are uncreditworthy but for broader macroeconomic reasons. With liquidity in domestic markets and in dollars at record levels, the credit curve has never been flatter: the yield pick-up from going down the credit spectrum is very low indeed. That’s good news for unsecured borrowers, and bad news for anybody trying to persuade a company that it will save on borrowing costs by creating a more creditworthy special-purpose vehicle.

Antonio Quintella, head of Brazil at Credit Suisse, says: “The ABS market hardly exists by any standards in Brazil. The legal framework is there but there is very limited volume out there.”

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree