Publication:
Development Financing during a Crisis : Securitization of Future Receivables

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dc.contributor.authorKetkar, Suhas
dc.contributor.authorRatha, Dilip
dc.date.accessioned2014-08-26T15:22:16Z
dc.date.available2014-08-26T15:22:16Z
dc.date.issued2001-04
dc.description.abstractMexico's Telmex undertook the first future-flow securitization transaction in 1987. From then through 1999, the principal credit rating agencies rated more than 200 transactions totaling $47.3 billion. Studying several sources, the authors draw conclusions about the rationale for using this asset class, the size of its unrealized potential, and the main constraints on its growth. Typically the borrowing entity (the originator) sells its future product (receivable) directly or indirectly to an offshore special purpose vehicle (SPV), which issues the debt instrument. Designated international customers make their payments for the exports directly to an offshore collection account managed by a trustee. The collection agent makes principal and interest payments to investors and pays the rest to the originator. This transaction structure allows many investment-grade borrowers in developing countries to pierce the sovereign credit ceiling and get longer-term financing at significantly lower interest costs. The investment-grade rating attracts a wider group of investors. And establishing a credit history for the borrower makes it easier for it to access capital markets later, at lower costs. This asset class is attractive for investors-especially buy-and-hold investors, such as insurance companies-because of its good credit rating and stellar performance in good and bad times. Defaults in this asset class are rare, despite frequent liquidity crises in developing countries. Latin American issuers (Argentina, Brazil, Mexico, and Venezuela) dominate this market. Nearly half the dollar amounts raised are backed by receivables on oil and gas. Recent transactions have involved receivables on credit cards, telephones, workers' remittances, taxes, and exports. The potential for securing future receivables is several times the current level ($10 billion annually). The greatest potential lies outside Latin America, in Eastern Europe and Central Asia (fuel and mineral exports), the Middle East (oil), and South Asia (remittances, credit card vouchers, and telephone receivables). One constraint on growth is the paucity of good collateral in developing countries. Crude oil may be better collateral than refined petroleum. Agricultural commodities are harder to securitize. Another constraint: the dearth of high-quality issuers in developing countries. Securitization deals are complex, with high preparation costs and long lead times. The ideal candidates are investment-grade entities (in terms of local currency) in sub-investment-grade countries (in terms of foreign currency). Establishing indigenous rating agencies can slash out-of-pocket costs. Developing standardized templates for certain types of securitizations might help. A master trust arrangement can reduce constraints on size. Multilateral institutions might consider providing seed money and technical assistance for contingent private credit facilities.en
dc.identifierhttp://documents.worldbank.org/curated/en/2001/04/5392498/development-financing-during-crisis-securitization-future-receivables
dc.identifier.doi10.1596/1813-9450-2582
dc.identifier.urihttps://hdl.handle.net/10986/19672
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 2582
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCOUNTING
dc.subjectASSET BACKED SECURITIES
dc.subjectASSET SECURITIZATION
dc.subjectASSETS
dc.subjectBALANCE SHEET
dc.subjectBANK DEPOSITS
dc.subjectBANKRUPTCY
dc.subjectBANKRUPTCY LAWS
dc.subjectBANKRUPTCY PROCEDURES
dc.subjectBOND
dc.subjectBONDS
dc.subjectBORROWING
dc.subjectBORROWING COSTS
dc.subjectCAPITAL FLOWS
dc.subjectCAPITAL MARKET
dc.subjectCAPITAL MARKETS
dc.subjectCOLLATERAL
dc.subjectCOLLATERALIZATION
dc.subjectCOMMERCIAL BANKS
dc.subjectCOMMERCIAL LOANS
dc.subjectCOMMODITIES
dc.subjectCOMPOUNDING
dc.subjectCOST SAVINGS
dc.subjectCREDIT RATING AGENCIES
dc.subjectCREDIT RISK
dc.subjectCURRENCY DEVALUATION
dc.subjectDEBT
dc.subjectDEBT RESTRUCTURING
dc.subjectDEBT SERVICING
dc.subjectDEVELOPMENT FINANCE
dc.subjectDEVELOPMENT FINANCING
dc.subjectDISCLOSURE
dc.subjectDOMESTIC CAPITAL MARKETS
dc.subjectELASTICITY OF DEMAND
dc.subjectEMERGING MARKETS
dc.subjectEQUITY CAPITAL
dc.subjectEXPLOITATION
dc.subjectEXTERNALITIES
dc.subjectFINANCIAL CRISES
dc.subjectFINANCIAL INFORMATION
dc.subjectFINANCIAL SUPPORT
dc.subjectFIXED COSTS
dc.subjectFLOATING RATE NOTES
dc.subjectFOREIGN CURRENCY
dc.subjectFUELS
dc.subjectGLOBAL CAPITAL
dc.subjectGLOBAL MARKETS
dc.subjectHARD CURRENCY
dc.subjectINCOME
dc.subjectINSURANCE
dc.subjectINSURANCE COMPANIES
dc.subjectINTEREST COSTS
dc.subjectINTEREST PAYMENTS
dc.subjectINTEREST RATES
dc.subjectINTERNATIONAL INVESTORS
dc.subjectINVESTMENT BANKERS
dc.subjectINVESTMENT BANKING
dc.subjectINVESTMENT BANKS
dc.subjectINVESTMENT CLIMATE
dc.subjectINVESTMENT PROJECTS
dc.subjectINVESTOR CONFIDENCE
dc.subjectISSUERS
dc.subjectLATIN AMERICAN
dc.subjectLAWS
dc.subjectLEGAL PROVISIONS
dc.subjectLIQUIDATION
dc.subjectLIQUIDITY
dc.subjectLITIGATION
dc.subjectLOCAL CAPITAL MARKETS
dc.subjectLOCAL CURRENCY
dc.subjectLONDON CLUB
dc.subjectMATURITY
dc.subjectMETALS
dc.subjectOFFERINGS
dc.subjectOIL
dc.subjectPOLICY MAKERS
dc.subjectPRIVATE DEBT
dc.subjectPRIVATE PLACEMENT
dc.subjectPROPERTY RIGHTS
dc.subjectPUBLIC POLICY
dc.subjectRETURN ON EQUITY
dc.subjectRISK MANAGEMENT
dc.subjectROYALTIES
dc.subjectSANCTIONS
dc.subjectSECURED DEBT
dc.subjectSECURITIES
dc.subjectSETTLEMENT
dc.subjectSOVEREIGN RISK
dc.subjectTAX REVENUE
dc.subjectTAX REVENUES
dc.subjectTAX SHARING
dc.subjectTRADE FINANCE
dc.subjectTRADE FLOWS
dc.subjectTRANSACTION COSTS
dc.subjectWILLINGNESS TO ACCEPT
dc.titleDevelopment Financing during a Crisis : Securitization of Future Receivablesen
dspace.entity.typePublication
okr.crossref.titleDevelopment Financing during a Crisis: Securitization of Future Receivables
okr.date.disclosure2001-04-30
okr.date.doiregistration2025-04-10T09:25:31.116703Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2001/04/5392498/development-financing-during-crisis-securitization-future-receivables
okr.globalpracticeFinance and Markets
okr.guid323541468780624671
okr.identifier.doi10.1596/1813-9450-2582
okr.identifier.externaldocumentum000112742_20041122092731
okr.identifier.internaldocumentum5392498
okr.identifier.reportWPS2582
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/11/22/000112742_20041122092731/Rendered/PDF/wps2582.pdfen
okr.topicEconomic Theory and Research
okr.topicFinance and Financial Sector Development::Housing Finance
okr.topicFinance and Financial Sector Development::Financial Intermediation
okr.topicBanks and Banking Reform
okr.topicInternational Terrorism and Counterterrorism
okr.topicEnvironmental Economics and Policies
okr.topicPayment Systems and Infrastructure
okr.unitEconomic Policy and Prospects Group
okr.volume1 of 1
relation.isAuthorOfPublication979327ad-ac79-5a52-98ad-ee91fca9734d
relation.isAuthorOfPublication.latestForDiscovery979327ad-ac79-5a52-98ad-ee91fca9734d
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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