Latin America’s structured finance market is expected to grow moderately in 2025, driven by corporate funding needs, infrastructure financing, and a stable investment environment. Despite economic uncertainties, S&P Global Ratings forecasts $35 billion in structured finance issuance, marking a 5% increase from 2024. While Brazil remains the largest and most complex market, Mexico and Argentina present new opportunities for issuance growth. However, macroeconomic volatility, high interest rates, and regulatory shifts pose challenges to credit stability across the region.

1. Economic Outlook and Structured Finance Issuance Trends

• Structured finance issuance in Latin America is projected to reach $35 billion in 2025, up from $31.6 billion in 2024.
• GDP growth in the region is forecasted at just over 2%, lagging behind other emerging markets due to tight financial conditions and global trade protectionism.
• Key drivers of issuance growth include infrastructure funding, demand from non-bank financial institutions, and corporate financing needs.
• Argentina, despite macroeconomic struggles, shows potential for increased issuance due to falling inflation and rising digitalization in financial services.

2. Brazil: The Largest Market Facing Rising Risks

• Brazil continues to dominate the region’s structured finance market, with complex transactions and high liquidity.
• Repackaged securities (CRAs, CRIs, FIDCs) remain the most active asset class, supporting corporate-backed receivables and agribusiness financing.
• Consumer credit performance is stable but household indebtedness remains a concern, especially with rising inflation and increased spending on discretionary expenses (e.g., online gambling).
• Regulatory changes (CVM Resolution 175) are boosting investor confidence in private credit markets, leading to higher demand for structured products.
• Risks include distorted credit pricing and heightened competition for assets, which could lead to poor risk management in new issuances.

3. Mexico: Poised for Growth Amid Stabilized Performance

• Mexico’s structured finance market is recovering, with issuance growing 40% in 2024 to $752.3 million, though still below pre-pandemic levels.
• Declining interest rates (expected to drop from 10% to 8% by end-2025) may drive increased issuance activity.
• Equipment-backed securities dominate the market (40% of total issuance), followed by consumer ABS (30%).
• Potential growth areas include cross-border transactions, data center financing, and commercial mortgage-backed securities (CMBS).
• Despite political and economic uncertainties, investor confidence is returning, with fewer defaults and improved credit ratings.

4. Argentina: Improving Conditions Could Favor Issuance

• Argentina's market remains subdued but shows signs of improvement as inflation stabilizes and interest rates decline.
• Consumer-backed ABS and credit card securitizations are the primary sources of issuance, with fintech and digital platforms playing an increasing role.
• Mortgage-backed securitization remains limited, but new mortgage trust structures could emerge as economic conditions improve.
• Cross-border transactions, remittance-backed securities, and export financing remain key areas for growth.

5. Cross-Border Transactions: A Growing Market for Infrastructure Financing

• Investor interest in bespoke financing structures continues to rise, particularly for infrastructure, trade receivables, and future flow securitizations.
• International wire transfer securitization is expanding, with banks using these instruments for foreign currency funding.
• Credit quality remains stable, but sovereign credit ratings and global economic shifts could influence performance.

Final Thoughts

The Latin American structured finance market remains resilient, supported by growing investor confidence, digital transformation, and infrastructure financing needs. However, macroeconomic volatility, regulatory shifts, and household debt pressures require close monitoring. While Brazil, Mexico, and Argentina offer distinct opportunities, managing credit risks, maintaining structural integrity, and ensuring stable liquidity flows will be critical for long-term market growth.