Fears over LatAm consumer credit boom

A lending spree by Latin American banks has led to a massive rise in consumer debt. Banks are content to securitise these loans, but what happens when consumers start defaulting?

Across Latin America, from Mexico to Argentina, banks are lending with abandon. But not to the usual sovereign and prime rate corporate borrowers. For the first time, the bulk of the credit growth is going to middle-class consumers, traditionally forced by high interest rates to pay in cash for homes and big-ticket items like cars. In five of the region's seven biggest economies, household credit expanded by an average of 30% in 2006, according to a recent report by the International Monetary