Camila Perez Aloi

RiskSpan is excited to attend Global ABS 2024 Barcelona and to sponsor its inaugural Private Credit summit! Reach out to discover how the RiskSpan platform elevates investor capabilities and learn about our strength in loan data management and analytics. #privatecredit #loans #mortgageloans

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Event-risk for Latin American banks in the form of weather-related shocks might be increasing, but Fitch believes that most entities should be able to face such events while maintaing their rating unchanged, given the generally adequate buffers of capital and reserves. However, certain banks might be more materially affected by these events, depending on their geographic, industry and borrower concentrations.

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I am pleased to announce the availability of my new joint paper with Fabio Mercurio and Alexander Sokol on SSRN (https://lnkd.in/gRqBpshk). The paper, titled "Autoencoder-Based Risk-Neutral Model for Interest Rates," explores how empirical information on yield curve evolution in the form of an autoencoder trained on historical data, can be integrated into risk-neutral term structure modeling. Autoencoders (AEs) are powerful deep neural network-based dimensionality reduction tools widely used in various fields, such as image compression. Although relatively new to finance, autoencoders are closely related to principal component analysis (PCA), which is commonly used in yield curve modeling, and are often referred to as non-linear PCA. Similar to principal components, autoencoders cannot be directly employed in risk-neutral term structure modeling due to the no-arbitrage condition, which imposes a very restrictive constraint. In this paper, we derive the condition for an AE to allow for no-arbitrage forward curve evolution and demonstrate how to construct AEs that are suitable for risk-neutral modeling. This no-arbitrage admissibility condition offers interesting geometric interpretation, which can be utilized to “visualize” the arbitrage-free constraint as it applies to forward rate curves.

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In January, I analyzed the iShares MSCI Mexico ETF (NYSEARCA:EWW) with a BUY rating given the county's various key drivers, such as nearshoring, rate cuts, and solid corporate earnings expectations. I am now downgrading the ETF to Sell based on political risks that are only partly priced in. The Morena Party's control of both houses may result in constitutional “reforms” that undermine checks and balances, while a second Trump term can further lead to selling pressure. Downgraded from Buy to Sell due to further political risks from constitutional "reform" and a potential second Trump term. The Mexican market has seen a 10% weaker Peso and a 15% decline in the EWW during political uncertainty that can persist in the next 5 months. EWW's valuation appears cheap post-sell-off at 11x PE, but analysts' downgrades are likely on weaker FX and increased country risk as we head into the 2Q24 earnings. #EWW #Mexico #Investing https://lnkd.in/emwJpjRG

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In this episode of FX in Focus, we speak to Corpay’s Alberto Roncajolo, Corpay’s Sales Director of Financial Institutions in the Latin America and Caribbean (LACA) region. Alberto highlights the stringent regulatory laws and unaffordable and inaccessible payment options in the Latin American region, and the hurdles they pose for financial institutions and their customers. Alberto offers his insights into how, and why, a Fintech solution might help financial institutions expand their services and support their customers’ global growth, and the variables you might consider when choosing a payments provider. https://lnkd.in/gbudyq6i

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Conversations about the Tech space in the past 18 months or so, often leads to the question/assumption of “isn’t tech in a down cycle and struggling right now?” Well, it depends. What sector of tech are we talking about. Here’s the latest SVB state of the market report on HaaS. Follow Silicon Valley Bank to see our periodic market reports on different sectors of the innovation economy. #yessvb #svb #HaaS #startupecosystem #innovationeconomy #venturecapital

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Looking back, if there's one thing I wish I had done differently in my career, it's stop wasting time on bonds that don’t match your criteria. Here's my take: 1️⃣ **Create a Plan:** To accelerate your career, a solid plan is key. Define your criteria and set clear objectives on the bonds you want to cover. 2️⃣ **Maintain Detachment:** Stay focused on your plan and don't get distracted by credit and rates opportunities that don't align with your goals. 3️⃣ **Journal Everything:** Document your progress and learnings meticulously. This helps in analyzing what works and what doesn't. 4️⃣ **Optimize Continuously:** Based on your journal insights, adjust your approach. Do more of what works and eliminate what doesn't. Remember, success comes from disciplined execution and continuous improvement. Let's focus on the process, and the results will follow.

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Why Argentinians trust Tether.io more than their own banking system. From Wikipedia: Corralito is the informal name for the economic measures taken in Argentina at the end of 2001 by Minister of Economy Domingo Cavallo in order to stop a bank run which implicated a limit of cash withdrawals of 250 ARS per week (at that time US$1 = 1 ARS). After Eduardo Duhalde assumed the presidency, US denominated debt and deposits were forcibly exchanged for Argentine pesos at 1.4 pesos per dollar for deposits and 1.0 for debt. The exchange rate spiked to 4 ARS/USD. 

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Carl Quintanilla / J.P. Morgan: The US consumer’s net worth “has increased ~$37T, or +33.6%, since the beginning of 2020, including $5T in realized capital gains from 2020 – 2022. Those capital gains, even if taxed at 37%, means that [Fed models] are undercounting Consumer cash levels by at least $3T. .. if an investor is using the Excess Savings metric, it gives a false sense that the US Consumer is on the precipice of rolling over ..” 🇺🇸 #INVESTMENTBANKING #HEDGEFUNDS #PORTFOLIOMANAGMENT #CEOS #CIOS #CFO #CFOS #CIO #ASSETMANAGEMENT #FED #INFLATION #ECONOMY #EUROPE #ASIAPACIFIC #MARKETS #COMMODITIES #ECONOMICS #PRIVATEEQUITY #MONEY #VENTURECAPITAL #INVESTING #BANKINGINDUSTRY #TREASURY

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  I had the pleasure of giving a talk at the Concordia #AmericasSummit in Miami on productivity growth in Latin America this week.   Here are a few takeaways:   Takeaway 1: The past 25 years were a global miracle for productivity, as the global median labor productivity jumped six-fold, from $7,000 per year to $41,000. But in Latin America, productivity growth has been relatively slow, increasing from $37,000 per year per employee in 1997 to $43,000 in 2022.   Takeaway 2: Low investment growth has been a significant driver of persistently low productivity growth in Latin America in the last 25 years. The growth of capital per hour in China grew over fourfold from 1997 to 2020. In Latin America it grew by less than 30% over the full 25 years.   Takeaway 3: There's a need for a significant rethink on infrastructure, economic diversification, institutional strength. Latin America's economic structure is highly dependent on commodities, with roughly 50% of its exports being commodities and its productivity growth in both manufacturing and services has been low.   Low investment is at the root of all of this. I posed the question, what would it take to double investment in Latin America? Thanks to the Concordia team for your partnership. Great collaborating with colleagues Andres Cadena, Julio Giraut, Santiago Carbonell, Carlos Enrique Buitrago, Joaquin Mahdjoubian Diaz Cano, and Paula Duran.     #productivity #LatAm  

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(Bloomberg) -- Private credit funds are diversifying into Latin America to drum up new investors as the $1.7 trillion industry endures the worst fundraising slump since 2020. The likes of Adams Street Partners, Antares Holdings and Hayfin Capital Management are just a few of the firms eyeing growing pots of cash at pension funds as well as among wealthy individuals in the region. “Capital is becoming scarce in the US and Europe, with funds struggling” to secure investment renewals, said Philippe Stiernon, CEO and managing partner at ROAM Capital, a Latin American alternative asset placement agent. “This challenging environment is pushing managers, even top-quartile ones, to diversify beyond their home markets.” Many institutional investors in the US and Europe are full up on private credit, with allocations by some major pension funds and insurance companies surpassing 30% of assets. To deal with the problem of saturation, private credit funds have been going further afield, including the Middle East and Asia, or designing funds aimed at retail buyers. In Latin America, private lenders can capitalize on growing wealth and a need by investors to offset risks in their domestic debt markets. Investing in loans of mostly unlisted American companies is seen as a safer bet. “Pension assets in Latin America have grown a lot over the last decade or two,” said Jeff Schlapinski, managing director of research at GPCA, the global industry association for private capital in emerging markets. “They’re showing more appetite for alternatives, and investing in US managers. It has been a growing source of capital.” Retirement managers in Mexico have been allowed to allocate cash to foreign firms since a 2017 law lifted restrictions. In one of the latest moves, Muzinich & Co. has relocated its Madrid-based director in sales and marketing Jesús Belascoain to Miami to cover Latin American investors. Ares Management Corp. last year linked up with Brazilian firm Vinci Partners Investments Ltd. to distribute its products. Brazilian hedge funds have been more active buyers of private and structured credit in recent years. They’ve been amassing more assets against a backdrop of an expansion of average wealth in the nation of more than 350% in the 15 years since 2008, according to UBS’s Global Wealth Report. Meanwhile, new legislation increased the tax burden for wealthy Brazilians who invested in hedge funds through exclusive funds, but cut taxes for local private credit funds. Lenders are hoping that will make them a receptive audience for their offshore-based credit funds. “Latin America is still relatively new to the alternative investments landscape, representing the last major frontier for LP growth,” said Stiernon at ROAM. Read more here: https://lnkd.in/ev6yr5GQ My take: Private credit is truly going global in a push to conquer new markets but as it does it also introduces new risks to funds

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🇨🇱 Chile: The BCCh continued slowing its easing pace as normalization approaches its final stages •The BCCh lowered its policy rate (TPM) by 50 bps to 6.0%, in line with ours and consensus expectation, in a unanimous decision. •The board kept unchanged its forward guidance by reiterating that additional rate cuts will be required going forward, in line with its March Monetary Policy Report (IPoM), while their size and timing will remain data dependent. •The board highlighted the additional decline in global inflation but noted its slower pace of reduction due to sticky services inflation. Policy makers also underlined the continued resilience of the US economy, driven by robust consumer spending and a strong labor market, while the outlook for the rest of the global economy remains limited. As a result, the board emphasized that uncertainty regarding the timing of rate cuts in the US remains the leading factor influencing global financial markets behavior. We view theses assessment as an acknowledgement of the ongoing risks from tighter global financial conditions and higher external costs. •The board also acknowledged the recent appreciation of the CLP, driven by surging copper prices, but did not signal any relevant changes to its stance or tone as a result, in line with our expectation. •The BCCh underscored that domestic activity has behaved broadly in line with its baseline scenario, with private consumption picking up and fixed investment stopping its previous decline. Meanwhile, policy makers also noted that labor market indicators have improved somewhat, but remain weak, in line with the current stage of the business cycle, while confidence indicators are still in negative territory. •The BCCh stressed that inflation figures for March and April were also in line with its baseline scenario, which had incorporated the upside effects of FX depreciation in previous months. Additionally, the board underscored that 2-year-ahead inflation expectations remained anchored at the 3%-target. •Overall, we found the tone of the policy statement to be largely unchanged compared to the previous meeting, as we had anticipated. The board reiterated its expectation of additional rate cuts in the upcoming meetings, consistent with the central scenario of its most recent rate corridor (see graph), which anticipates a slowdown in the easing pace starting at either the June or August meetings, for a year-end rate of 4.75%-5.0%. We think that the minutes of today’s meeting – to be published on June 7th – will provide useful information about BCCh’s next move, as they will reveal whether a larger or a smaller cut were considered as alternatives to today’s decision. This may shed some light on the board’s current degree of sensitivity towards external macroeconomic and financial conditions, as well as the better-than-expected performance of the CLP in the past few weeks. We still expect consecutive 25-bps cuts until year-end. Andrés Pardo A.

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The clearing conundrum… Great panel at #thenetworkforum today about cash equity clearing and how to ensure interoperability for participants, enough profitability and sustainability for CCPs and resiliency for the market! Very good insight from Laura Bayley, Tim Beckwith, Ivan Gilmore, well orchestrated by Rafael Plata.

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Here, in simple terms, is what embedded finance means for licensed banks doing it right. "Acquiring customers at scale on our partners’ platforms could cost as little as €3, compared to €200 for traditional incumbents" Indeed, the LTV of these customers may not be as high as a 'regular' customer, because there is very little direct cross sell that banks can do but nevertheless, the much lower cost to serve will more than compensate. Having done it once already, Standard Chartered (they and SEB Embedded are the only incumbents already in flight, NatWest Boxed is next) has an incredible opportunity in Asia via Nexus and audax. SC has the relationships with large enterprises, the required product range and the advantage of a balance sheet to win in Asia. I'm very bullish on them. https://lnkd.in/gD_Twm8C

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Is time for Citi high levels, CLevels, and particularly Citi NY executives with Mexico Unit executives, stop misleading investors (included potential Banamex buyers harmed before, clients and employees forced to resign or fired massively on Citi job cuts lay off plans) making "#innacurate or #false announcements about Citibanamex failed exit/deal/sale" as IPO to 2025 or later, voluntarely deforming and omitting key information about real reasons and risks delaying Citi Banamex exit, abandoning 22M clients and +30K employess. https://lnkd.in/gZ7xT6F4 BlackRock Vanguard State Street Berkshire Hathaway Buffet must read carefully How Citigroup, has stated clearly on its 10K submitted to the SEC Feb 2024, as never before potential #risk, #regulatory issues, #investigations, additional fines to paid, e.g. directly related to OCC-FEDRESERVE 400M fine and 3 consent orders, also mentioned that had received #subpoenas and information requested from US Attorneys Offices, DOJ-MLARS anti #Moneylaundering units, FedReserve, OCC and Fincen staff. Citi have recognized on its 10K detailed texts points below....1.3B potential #losses, and additional #expenses for litigation, legal, #complaints, #damages caused-even punitives- and regulatory issues (still NOT estimated) for could not complied neither satisfied #regulators demands (Oct 2020 consent orders still uncomplied or violated, Sep 2022 public reprimand by OCC-FEDRESERVE, recent Citi #Auditors findings-as Reuters reported-as consent orders violated, nor have approved Sep-Oct 2023 OCC #examinations related to consent orders compliying with at key issues " reopened ") "As of December 31, 2023, Citigroup estimates that the reasonably possible unaccrued #loss for these matters ranges up to approximately $1.3 billion..." "Moreover, the #severity of the remedies sought in #legal and regulatory proceedings to which Citi is subject has remained #elevated. For example, U.S. and certain non-U.S. governmental entities have increasingly brought criminal #actions against, or have sought and obtained #criminal #guilty pleas or deferred #prosecution #agreements from, financial institutions and individual employees." "There can be no assurance that such improvements will be implemented in a manner satisfactory, in both timing and sufficiency, to the FRB and OCC" "Moreover, the OCC consent order provides that the OCC has the right to assess future civil money #penalties or take other #supervisory and/or enforcement actions. "...Citigroup and Related Parties also receive grand jury subpoenas and other requests...from federal or state law enforcement agencies... USAO, DOJ-MLARS, FINCEN of the US Treasury...relating to Citigroup and its #customers" Page 159 "Citi has certain insurance subsidiaries, primarily in #Mexico, that issue long-duration #insurance contracts such as traditional life insurance policies and life-contingent #annuity contracts..." Filing Date to SEC Feb 23, 2024 Form10-K pdf

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One of the biggest trends we're monitoring right now is the growth and development of #PrivateCredit #CLOs. Learn more about this evolving market and the potential opportunities on offer: https://ow.ly/9aLn30sBSeP

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