The development of Chile's domestic securitization market is gathering pace, with half a dozen transactions in the pipeline following the groundbreaking deal launched in January by Transa Securitizadora. As Euromoney went to press, Transa was about to launch a second offering, consisting of $9.7 million of notes backed by mortgage loans.
Potential issuers believe asset-backed paper will prove highly attractive to institutional investors, with the primary buyers being insurance companies and pension fund managers (Administradores de Fondos de Pensiones - AFPs). Both have an unsatisfied appetite for longer-tenor paper. The AFPs currently have around $28 billion under management, and even a small portfolio allocation into asset-backed bonds will support the growth of a sizeable market.
Securitization has been mooted for some years in Chile, but progress has been held up by delays in passing appropriate legislation. And there is still much to be done. At present only non-bank financial institutions are allowed to do securitizations, and the much bigger commercial banks are excluded from the market. Thus the first securitizations are likely to involve the specialized mortgage finance companies and the leasing groups.
First off the mark was Transa Securitizadora, a unit of mortgage lender Administradora de Mutuos Hipotecarios del Centro, which successfully closed a deal back in January.