Recent Advances in Future-Flow Securitization

"Market placements backed by hard currency receivables can allow issuers to escape the sovereign credit ceiling, thereby opening doors to lower cost finance. At a macro level, such placements can also prevent large-scale panic that can result from sudden loss of reserves. An analysis of such deals completed over the past five years shows that this asset class has continued to perform admirably even following the devaluation and debt defaults in Argentina. Issuers from many developing countries outside of Latin Amena have become active in this asset class. Secritization of diversified payment rights (DPRs) has gained currency with Brazilian banks taking the lead since 2001. Receivable pooling has occurred increasing the access of smaller issuers from multiple jurisdictions to the asset class. Mexico has graduated from securitization of foreign currency future receivables to securitizing local currency existing assets. Finally, despite falling costs and growing familiarity with this asset class, it appears to be under exploited-the potential size of this asset class remains a multiple of the current issuance." [PUBLICATION ABSTRACT]