Delinquencies for Brazilian ABS increase dramatically over the last year

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This study is the second of  three reports that we have recently issued that looks at credit performance and the levels of delinquent and non-performing loans in Brazil’s financial system. This report focuses on Brazilian asset-backed securities.

LATAM Structured Finance Credit Performance FIDC Collateral Nov 2014

 

Trendbank Abandons R$400 million ABS


Trendbank Multisetorial investors in for a rough rid

 

Click on the link below to read the entire article

LASFA Trendbank Article Final

This is the first of two articles discussing Trendbank’s decision to abandon its FIDC (Brazilian ABS) that was collateralized by factoring receivables and other types of business debt.  As we discuss in the article, rapidly growing defaults in the ABS forced the company to make the not unheard of decisions to fire 300 of its 360 employees (most of whom worked in the servicing area), move the company’s offices, and call an investor meeting to announce it all.  Austin Rating seemed surprised; the Brazilian rating agency lowered the ratings 11 stops from AA-(Brazil) to B(Brazil) after reaffirming the AA- rating in May 2013. Planner Corretora, the administrator, also seemed be caught by surprise.  This seems strange given that Trendbank fired so many people and moved the company headquarters, which were a mere ten blocks from Planner’s headquarters.  The saddest part of the entire story is that investors should have seen this coming two years ago.

 

Our latest Journal of Structured Finance Article: “Pricing Brazilian ABS to Trade in the Secondary Market: Benefits from Assimilating Best Pricing Practices”

Here is the link to the Journal of Structured Finance Article

Brazilian asset-backed securities (ABS) appeal to investors because of their relatively high yields and diversification benefits. However, Brazilian and international investors struggle to price these ABS because of the country’s unique financial calculations, lack of transparency, and the scarcity of quantitative pricing tools in Brazil.

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