Nacional Financiera Boliviana Sociedad de Titularización S.A. (NAFIBO ST) is the leading securitisation company in Bolivia and the most innovative in Latin America having securitised future cash flows of small companies, cooperatives and NGOs oriented to microcredit. NAFIBO ST has also pioneered the use of structured notes over the past few years, while such products have been largely out of favour in many countries. Its portfolio of companies is wide ranged, from pharmaceuticals, cement producers, supermarkets to large mining operations and energy projects.
NAFIBO ST is owned by Banco de Desarrollo Productivo (BDP SAM) a second-tier bank owned by the Plurinational State of Bolivia and Corporación Andina de Fomento (CAF). NAFIBO ST represents about 65 percent of the securities issued in the Bolivian capital markets in the last two years being one of the largest issuers in the world relative to its local market. After the Central Bank of Bolivia, through its securitisations, NAFIBO NST is the second issuer in the country and holds about 99 percent of the securitisation market.
Although it is not the only market player, competition is nonexistent for this high quality very prestigious company.
Considering the deep economic and structural changes carried out in Bolivia by the government, NAFIBO ST has swiftly oriented its activities in order to grab a new customer: The State of Bolivia. Billions of dollars are being demanded by the government in order to carry out an aggressive investment plan in infrastructure and productive endeavours. “If we could only grab about 10 percent of the financing needs of the State of Bolivia, we would be one of the largest securitisation companies in Latin America” says Jaime Dunn De Avila, founder and CEO of NAFIBO ST. The demand for NAFIBO ST’s services however are strong from foreign governments and public institutions in El Salvador, Costa Rica, Honduras, Ecuador and as far as the north of Africa.
Dunn is the only certified securitisation professor by the Congreso Latinoamericano de Fideicomiso (COLAFI) of the Federación Latinoamericana de Bancos (FELABAN). He has been educated at Colgate University in Hamilton New York and holds an MBA degree from Universidad Catolica and the Harvard Institute of International Development. Dunn is not only a pioneer on securitisation in his own country and Latin America, but has also worked on securitisation norms, regulation and projects in many countries including Egypt. As a young municipal bond and later on a mortgage-backed securities trader in a fixed income securities trader in New York, came back to Bolivia in the late 90s and decided to create what it is today the largest securities market of its country. Dunn began the challenge being a co-author of today’s Securities Market Law of Bolivia and many of its regulations. He has also written several books and articles on this issue. He keeps busy giving over 40 worldwide seminars on securitisation on an average of 11 countries per year, promoting Bolivia and its new highly successful securitisation market.
NAFIBO ST holds the most advanced and best trained specialists in securitisation in Bolivia and the region. It’s a 14 people company (including secretary and cleaning personnel) with more than $600m in securitisations to its name and close to $300m in administration today. “Only NAFIBO ST paper hold an AAA rating in Bolivia”, says Dunn. Its investors are widely spread from local mutual funds, pension funds, international institutional investors and surprisingly a large amount of retail investors that hold less than $100. Clearly NAFIBO ST is bringing the usually seen as far-reaching securities market to the common people.
NAFIBO ST securitisation business starts at $1.5m, an amount unheard of anywhere in the world, in an area of business which averages around $50m. Clearly NAFIBO ST strategy is in harmony with the size of the Bolivian economy. Bolivia is a landlocked country with about 10 million people and GDP sitting at around $18bn. As one of the poorest countries in the world, Bolivia has shown an unusual growth in transactions through its local securities market. Most of the growth is accounted to NAFIBO STs market operations. Securitisation placements are extreme for NAFIBO ST, beginning around $1.5m, but lately amounts have passed the $150m. “Doing a $1.5m securitisation deal is more exciting” says Dunn, “What’s more challenging, surgery on an elephant’s or mosquito’s heart?” then asks.
NAFIBO ST’s structured notes with up to 100 percent capital guarantee are one of a kind since they are completely arranged using local assets. Bolivian treasuries bought to local pension funds are combined with future cash flows or other riskier assets created even AAA rated securities where risk has been perfectly managed at a point of almost disappearing. “That is the alchemy of securitisation” says Dunn, known for using curious magic acts on its seminars to the perplexion of its audience.
Another interesting securitisation is related with Societe Generale, the prestigious French bank. This involves the securitisation of a structured note fully designed and provided by Societe Generale and re-packaged and sold though a local SPV in Bolivia. Through this mechanism, Bolivian investors are able to invest in various strategies and hedge funds fully diversified and with a 105 percent capital protection granted by Societe Generale.
In its repositioning strategy in Bolivia and the region, NAFIBO ST is changing its denomination to “BDP ST”, looking to leverage on BDP SAM, its largest stock holder and the most important development-oriented financial institution. Through this change, NAFIBO ST is looking to initiate Bolivia as its largest investment banking customer, maintaining an important portfolio of private companies. NAFIBO ST has seen a great opportunity in combining the private and public sectors as one under new government rules Bolivia has what is known as a “plural” economy, where government-run and private companies must coexist.
Bolivia has been placed in the top two world leaders in microfinance, with NAFIBO ST in the forefront. The firm is rapidly becoming recognised on the securitisation world platform of unusual cash flows and institutions.