IIC Participates In São Paulo’S Conference On Securitization Sharing Its Experience In Assisting SMEs Tapping Local Capital Markets


São Paulo,Brazil-The Inter-American Investment Corporation (IIC) participates as a key speaker at the conference "Securitization:Strengthening the Foundation" that is being organized by Uqbar a Rio de Janeiro based financial knowledge company focused on the Brazilian domestic securitization market. The event will bring together professionals from leading institutions to discuss the development of Brazil’s domestic capital and securitization markets.

Access to appropriate sources of financing is essential for companies to grow, especially in the current climate and with the challenges of a globalized economy. In Latin America, small and medium-size companies (SMEs) have very limited access to financing, especially long- and medium-term financing on appropriate conditions. Such financing is necessary for the sustainable growth of this sector, which can be the most dynamic sector of an economy thanks to their innovativeness and greater ability to adapt and compete in a changing economic environment as well as the most vulnerable to economic cycles.

In Latin America, on a comparative basis, companies have greater difficulty in accessing financing in the capital markets or through other mechanisms. Multilateral agencies such as the IIC play a crucial role in assisting SMEs in particular accessing these markets or other sources of financing. The IIC approached this challenge and successfully helped companies access financing through innovative structures.

Mr. Steven Reed, IIC Deputy Manager, said "in a country the size of Brazil, what makes the IIC unique in its role as a development institution, is its ability to use its capabilities to facilitate the mobilization of additional sources of financing through innovation and by demonstrating to other private lenders and investors through our transactions that the legal and regulatory frameworks and market conditions are tested and viable. The role of the IIC is to lead the way, to demonstrate to others that the new market opportunities are available."

In Brazil, in particular, the IIC led the way ahead of all the other multilaterals, when it took the initial risk demonstrating that the mortgage-backed securities (MBS) legislation was validly tested and that these instruments were viable investment alternatives for institutional investors. In 1997, a Brazilian law was passed that facilitated the development of the mortgage market, particularly of the secondary mortgage market. Brazilian Securities, Brazilian Mortgages and the IIC worked together in structuring the first local investment grade rated mortgage-backed security. The underlying mortgages backing the MBS issued were housing loans for middle to lower income families. The IIC initially fully underwrote the series of senior mortgage-backed securities issued, held them in portfolio and then sold them to institutional investors. In this way, the domestic savings was the primary source of financing of the growing mortgage market.

The Inter-American Investment Corporation, a multilateral financial institution that is member of the Inter-American Development Bank (IDB) Group, provides financing (in the form of equity investments, loans, guarantees, and other instruments) and advisory services to private enterprises in Latin America and the Caribbean. The IIC's mission is to promote the economic development of its regional member countries by stimulating the establishment, expansion, and modernization of private enterprises, particularly those that are small and medium in size. For more information on the IIC's activities, please visit www.iic.int.

Contact: Steven Reed

Telephone: (202) 623-3981

Email: stevenr@iadb.org