The market of capital is going to be the engine of consumer financing, according to a report from the risk rating agency Moody’s. This is the securitization of credits, an option that is often used by large commercial chains.
“At Moody’s Local Argentina we expect sustained growth in the issuance of new securitizations and the appearance of new potentially securitizable assets,” the report states.
He adds that “the assets related Consumer portfolios will continue to be the main assets underlying local market”.
“However, the emergence of new longer-term assets and structures that provide exposure to different “risk-return alternatives for sophisticated investors”adds the report.
According to Moody’s, 99 Trust Funds were issued throughout 2024. If 2020 is discounted, which was the year of the pandemic where only 78 were emitted, this year is the year with the lowest level of emissions.
The largest amount of emissions were made between in 2017 and 2018, with about 182 and 186, respectively. Securitization is a tool that allows companies or banks to offload risk in the capital market by issuing bills or bonds that offer a return to investors.
That, in turn, allows large commercial chains, make offers and bonuses to your clients with fixed installments.
“From Moody’s Local Argentina (MLA) We expect that the payment capacity of the debtors of the underlying portfolios will gradually recover during the first part of the year as a consequence of a reactivation in economic activity and its consequent recovery in the purchasing power of salaries,” explains the rating agency.
The problem of late payment
Trusts that have consumer loans as underlying assets have the problem, in times of inflation, that default rates are higher at the beginning. Then, As the quotas are fixed, they are liquidated and compliance is normalized.
But the report considers that this time, as inflation decreases, delinquencies will be distributed more evenly throughout the loans.
In 2024, 84% of trusts have consumer loans as assets; agricultural, 9%, collection rights, 3% and others, 4%.
The securitization of mortgages
The possibility of offloading the risk of mortgages in the market is something that banks have been demanding for a long time.
Claudio Cesario, the holder of the Association of Banks of Argentina (ABA) which brings together foreign capital entities that are in the country, anticipated that next year there will be issues.
“Next year there will be bank bond issues,” said the ABA director. He explained that “in order to be able to download, this requires two conditions, first important institutions such as insurance companies, and that the credits that are originated and discharged have a rate such that it is the discount rate that when I receive what I download, it allows me to continue lending.
Source: Ambito
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