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Latin MBS issuance to continue rapid pace of growth

Structured finance in real estate is growing at 50% a year in Brazil and Mexico and at 20% a year in Argentina, according to rating agency Standard & Poor’s.

Euromoney Liquid real estate March 2007 

In Latin America during 2006, total mortgage-backed securitizations amounted to $2.9 billion (21% of domestic securitization volumes for the region) against $1.7 billion in 2005.

Structured finance, including MBS and securitizations of loans for residential or commercial property development, took off in Mexico in 2003. Real estate-related deals represented 47% of the total of $4.4 billion of securitizations in Mexico’s local market in 2006, according to Moody’s.

In Brazil, 8.2% of the total of $5.5 billion of securitizations were mortgage backed. The number of issuers of Certificados de Recebiveis Imobiliarios Certificates of Real Estate Receivables) rose to 18 in 2006 from eight in 2005.

In Colombia, mortgage-backed deals represented 96% of the total of $674 million of securitizations in 2006. The market was once again dictated by activity from Titularizadora Colombiana, the Colombian equivalent of Fannie Mae. Total securitization rose by 109% between 2005 and 2006. Overall, Colombia has the most advanced MBS market in Latin America in terms of outstanding mortgages that have been securitized (30%).

Alexander Batchvarov, head of international structured finance research at Merrill Lynch, says: "We expect to see real estate-backed securitizations in Latin America grow strongly in the next few years.

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