Moody's forecasts recovery in securitizations in Mexico

The rating agency Moody's anticipates that the volume of securitization issues in Mexico will have a recovery this year and grow 3.5%, after having stopped in 2020.

In an analysis, Moody's said that "the credit quality of new securitizations in Mexico, as well as the performance of current transactions, will improve as the economic impact of the pandemic begins to wane in 2021.

A securitization consists of packaging assets that generate flows and placing them in the stock market to obtain financing; in a simplified manner, debt backed by those assets is issued.

In 2020 only four securitizations were issued in Mexico, the lowest level since 2009. This year, it is expected that the gradual recovery of private consumption will support consumer debt securitizations.

"We expect at least two residential mortgage-backed security (RMBS) transactions in 2021, along with a resumption of equipment lease securitizations as private investment recovers," explained Moody's.

The study predicts that securitizations will benefit from improved unemployment rates, and believes that residential mortgage-backed securities transactions to public sector employees, as well as corporate and consumer asset-backed securities transactions will report lower levels of delinquency than last year.