Carole Sanz-Paris

The Green, Social, Sustainable and Sustainability-Linked Bond market remains strong in 2023 and exhibits wider geographical distribution across Latin America and the Caribbean.

Sustainability-Linked Bonds offer so many benefits that potential issuers cannot overlook this debt instrument.

Latin America is appealing to ESG investors - evidenced by a recent surge in Sustainability-Linked Bonds issuances. The region's potential for impact is large and #latinamerica started to establish itself as a key ESG investment destination. It is the perfect time for local companies to consider their sustainability-linked opportunities!

Green, social and Sustainable bonds are one of the major financial innovations in sustainable finance of the past decade. We anticipate strong growth of the thematic bond asset class in Latin America and the Caribbean!

Fintech lending platforms represent a small share of the financial institutions market in Latin America and Caribbean but are expanding rapidly in segments such as lending to SMEs. Fintech lenders in the region identify financing as one of the major challenges to grow their lending portfolio. Multilaterals, such as IDB Invest, can help the lending techs establish securitization program to access the debt capital markets and support financial inclusion in the region. By supporting securitization… Show more

Fintech lending platforms represent a small share of the financial institutions market in Latin America and Caribbean but are expanding rapidly in segments such as lending to SMEs. Fintech lenders in the region identify financing as one of the major challenges to grow their lending portfolio. Multilaterals, such as IDB Invest, can help the lending techs establish securitization program to access the debt capital markets and support financial inclusion in the region. By supporting securitization issuance by lending tech, multilaterals can send strong signals to the market about the quality of issuance and help attract institutional investors.

At the end of last year, IDB Invest subscribed senior notes issued by the Fundo de Investimento en Direitos Creditórios (FIDC) of Mercado Livre, a leading commerce, payment and electronic credit company. This securitization transaction aims to increase the sources of financing available to micro, small and medium enterprises in Brazil that have limited access to loans from traditional sources. IDB Invest's financing allows the FIDC to increase its visibility and consolidate its trajectory, helping to mobilize financial resources from local institutional investors. Show less

Moody's outlook presentation for EMEA ABS & RMBS and results of the survey of market participants.

Specialised lenders and non-bank entities will make up an increasing share of issuance in 2017, particularly in the UK and the Netherlands. Private equity funds have penetrated the European mortgage market and use securitization to refinance portfolio purchases
While new entrants may support issuance levels, the lack of historical data, different origination practices and segmented… Show more

Moody's outlook presentation for EMEA ABS & RMBS and results of the survey of market participants.

Specialised lenders and non-bank entities will make up an increasing share of issuance in 2017, particularly in the UK and the Netherlands. Private equity funds have penetrated the European mortgage market and use securitization to refinance portfolio purchases
While new entrants may support issuance levels, the lack of historical data, different origination practices and segmented products are key credit considerations for pools originated by new entrants.
Moody's says low rates will support borrower affordability. Show less

Italy's housing market is in the nascent stages of a recovery. Mildly positive macro conditions, low interest rates and low household debt leverage will help stabilize credit trends for securities backed by residential mortgages into 2016.
Some signs of recovery are emerging, but its pace will be muted. New mortgage applications soared by 42.5% year-on-year. House prices have fallen by 19% since their peak in 2008, but trends suggest that they are slowly stabilizing.
In the longer term… Show more

Italy's housing market is in the nascent stages of a recovery. Mildly positive macro conditions, low interest rates and low household debt leverage will help stabilize credit trends for securities backed by residential mortgages into 2016.
Some signs of recovery are emerging, but its pace will be muted. New mortgage applications soared by 42.5% year-on-year. House prices have fallen by 19% since their peak in 2008, but trends suggest that they are slowly stabilizing.
In the longer term, a slower population increase, muted economic growth and high unemployment will weigh on housing demand. This points to house prices staying relatively stable in 2016, which holds back a more pronounced recovery for the market.

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As the stock of outstanding repossessed properties declines, recoveries will continue to improve, since bottoming out in 2013.
Recovery rates on repossessed properties have risen in parallel with an improving economy and a 5.8% increase in Spanish house prices since 2013. Mortgage loan origination shot up by 13% in Spain during 2015-14.
Given the favourable economic backdrop, we consider that Spanish securitization vehicles will be able to sell their repossessed properties more… Show more

As the stock of outstanding repossessed properties declines, recoveries will continue to improve, since bottoming out in 2013.
Recovery rates on repossessed properties have risen in parallel with an improving economy and a 5.8% increase in Spanish house prices since 2013. Mortgage loan origination shot up by 13% in Spain during 2015-14.
Given the favourable economic backdrop, we consider that Spanish securitization vehicles will be able to sell their repossessed properties more easily.

The study covered 14,000 repossessed and defaulted loans and analysed the sale prices of 5,008 repossessed properties in rated Spanish RMBS. Moody's estimates that 43% of all repossessed properties in the Spanish RMBS included in the study have been sold so far, compared with just 30% as of its previous study in 2013. The sales of repossessed properties averaged 34% of their original valuation. The corresponding decline in property value (66%) is greater than the peak-to-trough national house price index.


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Despite the 2009 global downturn and the recession affecting many European countries, none of the senior notes in EMEA asset-backed securities (ABS) or residential mortgage-backed securities (RMBS) that we rated Aaa (sf) incurred, or are expected to incur, principal losses. Overall, less than half a percent of all of the EMEA ABS and RMBS notes rated by us have realised a principal loss, and only 2% are still likely to incur a loss. These relatively few incidences almost exclusively affected… Show more

Despite the 2009 global downturn and the recession affecting many European countries, none of the senior notes in EMEA asset-backed securities (ABS) or residential mortgage-backed securities (RMBS) that we rated Aaa (sf) incurred, or are expected to incur, principal losses. Overall, less than half a percent of all of the EMEA ABS and RMBS notes rated by us have realised a principal loss, and only 2% are still likely to incur a loss. These relatively few incidences almost exclusively affected subordinated EMEA ABS/RMBS notes and stemmed primarily from underperforming collateral or exposure to counterparty risk during the downturn.
As Europe’s economy continues to stabilise, we expect a decrease in the number of notes likely to incur principal losses. For newly structured or restructured EMEA ABS/RMBS deals, the likelihood of notes incurring principal losses is reduced because of improved structural protections, such as higher credit enhancement, and more stringent mechanisms against counterparty risks. Show less

This study compares the prices of repossessed properties sold between 2010-13 to the regional house price decline from the peak reported by the Spanish Statistics Institute (INE). The results show that repossessed property prices were significantly lower than the corresponding decline in the INE regional house price index since Q1 2007. This difference is mainly the result of the forced sales process of these properties, which took an average of 1.9 years. During this time, the properties… Show more

This study compares the prices of repossessed properties sold between 2010-13 to the regional house price decline from the peak reported by the Spanish Statistics Institute (INE). The results show that repossessed property prices were significantly lower than the corresponding decline in the INE regional house price index since Q1 2007. This difference is mainly the result of the forced sales process of these properties, which took an average of 1.9 years. During this time, the properties likely worsened in condition, hurting sales prices.

Loss severities on mortgage debt associated to repossessed properties average 71% across the Mediterranean cost, the Canary Islands and Andalucía. Losses experienced on Spanish repossessed properties are high but remain within Moody's assumptions for defaulted loans.

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Having relied heavily on credit-fuelled domestic demand and a prolonged property boom, the Spanish economy has suffered from the weaker macro-economic climate. The weakened economic conditions, including rising unemployment and the deteriorating housing market have weighed heavily on mortgage performance, with delinquent and defaulted loans rising sharply in Spanish residential mortgage-backed securities (RMBS).
Changes to the banks' litigation strategies have resulted in the rapid… Show more

Having relied heavily on credit-fuelled domestic demand and a prolonged property boom, the Spanish economy has suffered from the weaker macro-economic climate. The weakened economic conditions, including rising unemployment and the deteriorating housing market have weighed heavily on mortgage performance, with delinquent and defaulted loans rising sharply in Spanish residential mortgage-backed securities (RMBS).
Changes to the banks' litigation strategies have resulted in the rapid acceleration of repossessions among Spanish mortgage pools. Lenders may end up holding mortgaged properties subject to foreclosure that fail to sell in the open auctions or after resorting to “dacion en pago” (payment in kind).
Although property acquisitions could be beneficial for RMBS transactions, there are some negative aspects, as holding properties may delay the recovery process. This may ultimately lead to a higher loss severity for the Spanish RMBS, if the Spanish housing market slumps any further.
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London and South East England dominate the UK buy-to-let (BTL) sector and account for a large share of mortgages securitised in UK BTL residential-mortgage-backed (RMBS) transactions. A sustained reduction in rental yield would be credit negative for UK BTL RMBS.