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Publication(World Bank, Washington, DC, 2002-06) Ratha, DilipSecuritization of future hard currency receivables, that is, converting them into tradable securities, can allow developing country borrowers with good credit to overcome sovereign credit ceilings, and raise financing in international capital markets. The note examines the case of PEMEX, Mexico's state-owned oil and gas company, which in 1998 issued oil export-backed securities that received higher ratings from international credit rating agencies than Mexico's sovereign debt. Relative to unsecured debt, securitization lowered interest rates on PEMEX borrowing by 50-338 basis points (0.50-3.38 percentage points). Another example offered is the case of Banco de Credito in Peru, whose overseas Master Trust in the Bahamas (an offshore account) makes principal, and interest payments, forwarding excess collections to its headquarters in Peru. To increase investor confidence, the amount of future-flow receivables transferred to the trust was set at 2.5 times debt service requirements. In 1998 this transaction setup received an AAA credit rating from Standard & Poor's - higher than Peru's sovereign credit rating.
Publication(World Bank, Washington, DC, 2002-03) Hammergren, LinnWorking with local researchers, World Bank staff recently analyzed a random sample of cases filed in the first instance courts of Argentina and Mexico. (First instance or trial courts make the initial rulings on cases based on both facts and law. Higher instance or appeals courts are often restricted to questions of law and so may not reconsider the facts of a case.) The Mexico study was conducted in the Federal District, the largest of Mexico's 32 local and state jurisdictions, and reviewed 464 debt collection cases brought under a special procedure that provides for rapid dispute resolution. In Argentina a stratified sample of criminal, civil, and labor cases was drawn from trial courts in the national capital, Buenos Aires (600 cases), and in the province of Santa Fe (450 cases). In both countries the identities of the parties, the nature of the cases, the amounts at issue, the times to disposition, and other data from the case files were coded and analyzed. Aggregate statistics kept by the judiciary and information from interviews and focus groups were used to help interpret the case file findings. Both studies revealed that when it comes to the operation of Latin American justice systems, much of what experts "know" is incorrect. Because this conventional wisdom often informs judicial reform projects, it can encourage changes aimed at solving nonexistent problems-while ignoring real ones.