RPT-Fitch expects stable credit environment for Latin American structured finance in 2014
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Dec 13 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings foresees stability across Latin American structured finance (SF) sectors in 2014, according to '2014 Outlook: Latin American Structured Finance,' a report published today at 'www.fitchratings.com'.
On average, asset portfolios are expected to perform within base case assumptions, reflecting stable economic conditions within each of the major Latin American countries.
The ongoing positive dynamics of the Brazilian oil industry support Fitch's stable outlook for offshore vessel contract monetization transactions in the cross-border market. Stable unemployment despite sluggish GDP growth drives the stable outlook for local Brazilian ABS.
Fitch's outlook for Mexican RMBS varies across segments. While the outlook remains negative for Mexican RMBS sponsored by private sector non-bank financial institutions (NBFI), Fitch expects recoveries within this segment to continue stabilizing in 2014.
Fitch continues to see widespread use of payroll deductible loans (PDLs) throughout Latin America. These products significantly mitigate willingness to pay risks. Fitch expects Latin American SF transactions backed by PDLs to remain stable in 2014.
Fitch affirmed more than 85% of Latin American SF transactions in 2013. While the downgrade/upgrade ratio continues to hover around 2/1, the majority of negative rating actions are isolated to NBFI Mexican RMBS.
Ratings assigned to Latin American SF are sensitive to changes in sovereign credit quality and shifts in macroeconomic conditions.