"It’s always important to read a room, but sometimes disrupting the room can help achieve something." - Pedro Pascal (Chilean-American actor)

MARKETS

February 27, End Of Day

• Argentina
  • S&P MERVAL Index = 2,193,656.65 (YTD = -13.42%)
• Brazil
  • BOVESPA Index = 124,798.96 (YTD = 3.75%)
• Chile
  • S&P IPSA Chile = 3,964.98 (YTD = 9.69%)
• Colombia
  • MSCI COLCAP = 1,627.96 (YTD = 18.00%)
• Mexico
  • IPC Mexico BMV = 52,607.61 (YTD = 6.25%)
• Peru
  • S&P/BVL Peru = 28,657.58 (YTD = -1.05%)

BUSINESS

Latin America Structured Finance Outlook 2025

Structured finance refers to complex financial instruments used to manage risk and provide liquidity, often through securitization of assets such as mortgages, loans, and future cash flows. In Latin America, structured finance plays a crucial role in corporate funding, infrastructure investment, and alternative lending mechanisms. Structured finance activity is closely tied to macroeconomic condition, in 2025, the market is expected to grow by 5% to reach $35 billion, with Brazil, Mexico, and Argentina leading issuance activity.

1. Growth in Structured Finance Issuance

• Projected issuance of $35 billion in 2025, a 5% increase from 2024.
• Key drivers: corporate funding needs, non-bank financial institutions, and infrastructure financing.

2. Brazil: High Liquidity but Rising Risks

• Brazil leads structured finance issuance, with repackaged securities (CRAs, CRIs, FIDCs) driving market activity.
• Consumer credit portfolios are stable, but household indebtedness and inflation pose risks.
• Regulatory changes (CVM Resolution 175) encourage investor participation, but intensified competition may distort credit pricing.

3. Mexico: Interest Rate Cuts Could Boost Issuance

• Issuance grew 40% in 2024 to $752.3 million, with further expansion expected in 2025.
• Declining interest rates (from 10% to 8%) could encourage financing activity.
• Equipment-backed securities dominate the market, while cross-border deals and CMBS transactions are emerging opportunities.

4. Argentina: Improving Market Conditions but Challenges Remain

• Issuance remains low, but falling inflation and interest rates could support future growth.
• Potential resurgence of mortgage-backed securities (RMBS), but low household savings and inflation risks remain barriers.
• Fintech platforms are gaining traction, increasing efficiency in financial trust markets.

5. Cross-Border and Alternative Financing on the Rise

• Growing investor interest in securitization of remittances, trade receivables, and infrastructure projects.
• Credit performance remains stable, but sovereign credit risks must be monitored.

CURRENT AFFAIRS

Argentina: Economic activity surged 5.5% in December, the fastest pace since mid-2022, surpassing analysts' expectations of 3.5%, according to INDEC. Growth was driven by expansions in financial intermediation and commerce. December also marked the third consecutive month of growth, with a 0.5% increase from November. While these signs suggest a potential turnaround amid President Javier Milei’s austerity measures, overall economic activity in 2024 declined by 1.8% year-on-year.

Chile: BHP will invest $2 billion to optimize its concentrator at Escondida, the world's largest copper mine, as part of a broader $10.8 billion investment plan in Chile. The company will soon seek environmental permits for the project. Escondida President Alejandro Tapia emphasized the plan’s role in maintaining production and benefiting the Antofagasta region. Finance Minister Mario Marcel highlighted that most foreign investment in Chile comes from existing companies reinvesting in new opportunities.

Mexico: Walmart’s Mexico and Central America unit (Walmex) is set to launch its debit card service through its fintech arm, Cashi, an executive announced. The move expands Walmex’s financial services, competing with players like Nubank and MercadoLibre. The company also plans to grow its credit offerings, currently capped at $978. While not seeking a banking license for now, Walmex has not ruled it out for the future.

FURTHER READING

Check our recently published insights here. Recent post:

📡 Incomplete Digital Revolution in Latin America: Challenges and Opportunities

• Persistent Digital Divide – While 75% of the region has mobile broadband, only 14% of rural households have fixed broadband access.
• Connectivity Gaps – Slow, unreliable internet and outdated infrastructure limit digital transformation.
• Unequal Digital Skills – Low-income and rural populations, particularly women, face barriers to digital literacy and device access.
• Opportunities for Growth – Investing in infrastructure, digital inclusion programs, and innovation can accelerate progress.

📖 Read more here.