Structured Finance in Latin America: Channeling Pension Funds to Housing, Infrastructure, and Small Businesses

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Hela Cheikhrouhou
World Bank Publications, 2007 - Law - 149 pages
Structured Finance in Latin America explores how structured finance mechanisms can channel pension savings to support projects in underserved sectors, deepen capital markets, and contribute to investment and economic growth. Private pension funds have been accumulating assets rapidly in the wake of pension system reforms in many Latin American countries. Strict investment regulations to protect workers' savings have limited their investment in highly creditworthy domestic securities, yet pension fund demand for new securities has outstripped issuance of eligible traditional corporate debt instruments. This has contributed to a high concentration of pension fund assets in public debt. Innovative structured finance mechanisms can help bring to the market a new set of creditworthy securities backed by pools of loans to small borrowers, mortgage loans or the expected proceeds of large infrastructure projects. These mechanisms create new investment opportunities for pension funds, while establishing additional sources of funding for underserved market segments. Policy makers and regulatory authorities have a catalytic role to play in the development of structured finance securities by establishing a conducive legal, regulatory, and tax framework. Structured Finance in Latin America serves as a practical guide for development practitioners, policy makers, and others working in government, international or nongovernmental organizations, and financial institutions, who focus on finance and investment; infrastructure, transport, and urban development; housing finance; small and medium-sized enterprise development; and pension reform.

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Page 118 - ... loan, the government will reimburse the lending institution for a portion of its loss. By providing this guaranty, the SBA is able to help tens of thousands of small businesses every year get financing they could not otherwise obtain. To qualify for an SBA guaranty, a small business must meet the 7(a) criteria, and the lender must certify that it could not provide funding on reasonable terms except with an SBA guaranty. The SBA can then guarantee as much as 85 percent on loans of up to $150,000,...
Page 139 - ... agreement. b. Simple average applied rate (latest year available). c. Share of total tariff schedule. d. Simple average of country tariff coefficients of variation, where a country tariff coefficient of variation is the standard deviation for applied tariff lines divided by the applied tariff. e. Latin America and the Caribbean: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Mexico, Paraguay, Peru, Uruguay, and Venezuela. f. East Asia and Pacific: Fiji,...
Page 122 - Meeting the Challenges in an Era of Globalization by Strengthening Regional Development Cooperation (United Nations publication, Sales No.
Page 119 - The fee is based on the maturity of the loan and the dollar amount that the SBA guarantees. On any loan with a maturity of one year or less, the fee is just 0.25 percent of the guaranteed portion of the loan. On loans with maturities of more than one year where the portion that the SBA guarantees is US$80,000 or less, the guaranty fee is 2 percent of the guaranteed portion.
Page 56 - The International Finance Corporation, the private sector lending arm of the World Bank...
Page 118 - SMEs generally must be operated for profit and fall within the size standards set by the SBA.
Page 82 - Klingebiel, Daniela, and Jeff Ruster. 2000. "Why Infrastructure Facilities Often Fall Short of Their Objectives.
Page 119 - US$80,000 or less, the guaranty fee is 2 percent of the guaranteed portion. On loans with maturities of more than one year where the SBA's portion exceeds US$80,000, the guaranty fee is figured on an incremental scale, beginning at 3 percent.
Page 118 - SBA determines if the business qualifies as a small business based on the average number of employees during the preceding 12 months or on sales averaged over the previous 3 years.
Page 19 - Different funds should be designed to achieve portfolio allocations that serve the long-term interests of workers. The main elements for differentiating funds should be equity holdings, maturity of assets, and eventually holdings of foreign instruments.

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