New strategy at Brazil's Caixa could boost RMBS market
The new strategy at Brazilian state-run bank Caixa could fuel the country's residential mortgage-backed security market (RMBS market), according to Standard & Poor's.
The government of market-friendly President Jair Bolsonaro, who assumed office on January 1, has unveiled a series of changes for state banks and other government-controlled firms.
"The bank plans to repay its 40bn reais (US$10.8bn) loan from the Treasury-in the form of hybrid instruments - through the asset sale proceeds. In addition, Caixa plans to tap the financial markets in order to expand its mortgage lending amid the likely rise in demand for home purchases as economy rebounds," said S&P in a report.
"If Caixa's intention to raise US$100bn in financing through securitization of mortgages is successful, we believe such action could spur the growth of RMBS market in Brazil. This, in turn, could provide a viable funding alternative for Brazil's banks," the S&P analysts said.
Recently appointed new CEO at Caixa by Bolsonaro, former investment banker Pedro Guimarães is leading the changes at Brazil's largest mortgage lender.
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News in: Political Risk & Macro (Brazil)
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