MIAMI, Fla. - In the wake of the Argentine pesification and default, crossborder MBS deals became the nio terrible of the Latin asset family. "Argentina derailed the cross-border MBS market and has caused a re-evaluation of the emerging market MBS in general," said Bear Stearns Senior Managing Director Jonathan Lieberman on the sidelines of Euromoney's Securitization in Latin America Summit.
The sovereign collapse underlined the asset category's acute vulnerability to such an event and investors and bankers turned to future flows to keep the structured market alive. Crossborder MBS transactions will eventually resuscitate, sources said, with Central America the most likely candidate in the near term and Mexico in the longer term.
Still, the mood remains extremely cautious and for the time being, it's the domestic markets that have the most to offer in the way of MBS. The message is clear for bankers: if you want a piece of the action, go local.
The blame for the MBS chill lies squarely with a handful of deals out of Argentina. Mortgages originated by now-stigmatized Banco Hipotecario Nacional (BHN) back these transactions. Assaulted on several fronts, all of the BHN deals have defaulted. The catalysts included the sovereign default; the pesification of dollar debt one-to-one, while the peso plunged against the greenback; Central Bank interference in contract provisions; and suspension of foreclosure actions, among others. The BHN deals, totaling US$616 million, didn't stand a chance.
Apart from the default, one of the …
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