Argentina ABS Market Outlook

the argentina abs market is one of the most developed markets in south america. low funding costs and a well-developed securitization framework have encouraged issuers to issue abs transactions. furthermore, the argentine government has implemented a solid macroeconomic framework to support the performance of the market with strong laws and regulations to protect investors. despite this regulatory framework being established, the argentine abs market has been subject to several unique factors in recent years which has resulted in a downturn in activity. most notably, a prolonged recession from 2012-2015 decreased the level of new abs issuance in the country. the inflationary environment impacted growth, rising unemployment figures increased delinquency rates and led to stricter lending standards, resulting in a suffocation of the securitization market. since the end of that recession, the argentinian economy has been recovering albeit slowly. the central bank of argentina has implemented effective monetary policy actions such as lowered interest rates to continue to support the market. these actions, together with the government's fiscal efforts, have helped to revive confidence in the country's financial system and in turn, provided stability to the abs market. despite all of this, the market is still facing challenges. the cost of funding in argentina has increased due to currency fluctuations, which will put additional pressure on the market performance going forward. also, investors remain cautiously optimistic in terms of the overall economic outlook under the new leadership, due to concerns over an unpredictable policy agenda. on the bright side, some influential international investors have expressed their commitment to the argentine abs market. several sovereign wealth funds are backing argentine issuers, which gives the market a more secure outlook with regard to future investments. also, increased capital market activity combined with lower taxes could help to boost the demand for argentine abs over the long run. to conclude, despite the challenging macroeconomic environment in argentina, the government's economic policies have provided stability to the argentine abs market. concerns remain regarding the unpredictable policy agenda of the government yet, the increased capital market activity and backing of influential international investors is granting greater security to the market. the performance of the market in the next 14 years will depend largely on how the government and the issuers are able to alleviate the current market challenges.