Cedulas Hipotecarias

It should be noted that due to the limited use of Cedulas Hipotecarias so far, the actual degree of overcollateralisation is at least within triple digits and this mandatory requirement is a major strength of the cedulas system. 

All in all, the secured nature of this type of product strongly reduces the loss potential in a default scenario and to date, since their inception back in 1869, no Cedulas Hipotecarias has ever defaulted. In Moody s opinion these factors justify a rating of two notches above the senior unsecured debt rating for the issuer. 

Although market makers provide a similar degree of liquidity for this product as for French and German Jumbos, the overall turnover in the cedulas has been somewhat limited. This is something that is likely to change in the near future. As of January 2003, the amount of Jumbo Cedulas Hipotecarias, with maturities exceeding two years, equals 16 with an outstanding volume of 30.05 billion. 

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