EEMEA Gains A Foothold In The Global Securitization Market ...

Future flow transactions are currently the most prevalentFuture flow transactions have been the most common structured transactions in theEEMEA region. Financial and export future flow transactions have proven popular bothwith foreign investors and with emerging market issuers possessing title over a flow offoreign currency receipts. The structure gives credit only to international cash flows fromforeign sources (such as offtakers for exported goods and products), thereby mitigatingtransfer and convertibility risks. Other risks of sovereign interference in a future flowtransaction are assessed on a case-by-case basis. Future flow transactions make up themajority of EEMEA securitizations that we have rated. A typical future flow transactionstructure is shown in chart 4.Emerging market originators benefit from the ability to borrow in hard currency againsthard-currency receivables for a longer term than they could achieve by issuing unsecureddebt securities, and potentially at a lower cost — provided the lower coupon is notoutweighed by the cost of structuring the securitization and providing sufficient creditenhancement. Furthermore, with risk-mitigating structural features in place that reducethe ability of the originator or the originator's government to interfere with the cash flowstream, issuers can potentially gain access to investors limited to purchasing investmentgradeobligations.Standard & Poor’s Page 4 of 20