CHICAGO--(BUSINESS WIRE)--Deteriorating conditions for unsecured issuance could lead Brazil's top-tier banks to return to future flow issuance, according to a new special report by Fitch Ratings.
Historically, Brazil was the largest market for future flow issuance; however, traditional issuers, aided by better issuer credit quality and sovereign stability, shifted away from future flow issuance and took advantage of improved access to unsecured debt markets during Brazil's economic upswing.
But recent macroeconomic deterioration has resulted in a harsh operating environment for Brazilian banks, weighing on issuer credit quality. To help meet future funding needs, Brazil's top-tier commercial banks are well positioned to securitize diversified payment rights (DPR) business lines.
Fitch began rating cross-border financial future flow transactions in the early 1990s and has seen the marketplace evolve ever since. The agency has rated hundreds of issuances from around 50 financial future programs sponsored by emerging market (EM) financial institutions.
EM financial future flows have performed exceptionally well; all Fitch-rated programs have paid debt service on time according to schedule, in some cases despite severe sovereign stresses. While there have been a few downgrades within this asset class, there has never been a default related to a financial future flow transaction.
The complete report 'Return to Future Flows for Brazilian Banks' is available at www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'.
Return to Future Flows for Brazilian Banks? (End of the Investment-Grade Era Could Revive Future Flow Issuance)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878424
Applicable Criteria
Future Flow Securitization Rating Criteria (pub. 12 Aug 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=868191
Related Research
DPR Securitizations from Lima to Istanbul (A Comparative Perspective)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=700111
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.