Latin America Structured Finance Advisers

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LATIN AMERICA STRUCTURED FINANCE ADVISORS LLC
An Emerging Market Absolute Return Credit
Strategy, With A Focus On Latin American
Structured Credit Securities
December 2016
Confidential
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Disclosure
THIS IS NOT AN OFFERING OR THE SOLICITATION OF AN
OFFER TO PURCHASE AN INTEREST IN LATIN AMERICA
STRUCTURED FINANCE ADVISORS, LLC (THE COMPANY).
ANY SUCH OFFER OR SOLICITATION WILL ONLY BE MADE
TO QUALIFIED INVESTORS BY MEANS OF A CONFIDENTIAL
PRIVATE PLACEMENT MEMORANDUM AND ONLY IN THOSE
JURISDICTIONS WHERE PERMITTED BY LAW. AN
INVESTMENT IN THE COMPANY IS SPECULATIVE AND
INVOLVES A HIGH DEGREE OF RISK. OPPORTUNITIES FOR
WITHDRAWAL, REDEMPTION AND TRANSFERABILITY OF
INTERESTS ARE RESTRICTED, SO INVESTORS MAY NOT
HAVE ACCESS TO CAPITAL WHEN IT IS NEEDED. THERE
IS NO SECONDARY MARKET FOR THE INTERESTS AND NONE
IS EXPECTED TO DEVELOP. THE FEES AND EXPENSES
CHARGED IN CONNECTION WITH THIS INVESTMENT MAY BE
HIGHER THAN THE FEES AND EXPENSES OF OTHER
INVESTMENT ALTERNATIVES AND MAY OFFSET PROFITS.
NO ASSURANCE CAN BE GIVEN THAT THE COMPANYS
OBJECTIVE WILL BE ACHIEVED OR THAT AN INVESTOR
WILL RECEIVE A RETURN OF ALL OR PART OF HIS OR
HER INVESTMENT. THE COMPANYS RESULTS MAY VARY
SUBSTANTIALLY OVER ANY GIVEN TIME PERIOD. This
material contains certain forward-looking
statements and projections regarding the future
performance of the Company. These projections are
included for illustrative purposes only. By their
nature, forward-looking statements and
projections are inherently predictive,
speculative, and involve risk and uncertainty
because they relate to events and depend on
circumstances that will occur in the future.
There are a number of factors that could cause
actual results and developments to differ
materially from those expressed or implied by
these forward-looking statements and projections.
No assurances can be given that the
forward-looking statements in this document will
be realized. The Company does not intend to
update these forward-looking statements. The
information contained herein regarding the
Company is confidential and proprietary. By
accepting this information, the recipient agrees
that it will use the information only to evaluate
its potential interest in the limited liability
company interests described herein and for no
other purpose and will not divulge any such
information to any other party. This material and
its contents are proprietary information of the
Company and any reproduction of this information,
in whole or in part, without the prior written
consent of the Company is prohibited. The
Company has obtained all information contained
herein from public sources believed to be
accurate and reliable. However, such information
is presented as is, without warranty of any
kind, whether express or implied. The Company
makes no representation, express or implied, as
to the accuracy, timeliness, or completeness of
any such information. All expressions of opinion
are subject to change without notice, and the
Company does not intend to update the information
contained herein. Results of certain comparative
indexes and benchmarks are shown for
informational purposes only. The Companys
investment program does not mirror any index or
benchmark shown and the volatility of the
Companys investment program may be materially
different. All investments involve risk,
including the loss of principal.
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Latin America Structured Finance Our Strengths
give us our Competitive Advantage
Structured for Accredited Investors qualified to
evaluate private securities historic
risk-adjusted returns average 13 to 14 US.
Combined Parties Provide U.S. Level Due Diligence
Legal and Economic Interests of All Parties
Aligned
Advanced Structuring Tools We Engineer
Profitability and Risk Exposure
Transparent Data Converted to Useful Information
Probability-based Risk Analysis and Economic
Pricing versus Book Value Accrual Accounting
Processing Efficiency Allows Greater
Diversification and Liquidity in US Dollars
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Portfolio Management and Security Selection
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Latin America Structured Finance Advisors and
Partners Our Strengths give us our Competitive
Advantage
U.S. Level Due Diligence
Legal and Economic Interests of All Parties
Aligned
Advanced Structuring Tools We Engineer
Profitability and Risk Exposure
Transparency Converted to Useful Data
Probability-based Risk Analysis and Economic
Pricing versus Book Value Accrual Accounting
Processing Efficiency Allows Greater
Diversification and Liquidity in US Dollars
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Strong Brazilian Partners Our Strengths give us
our Competitive Advantage
R2.5 Billion under management, 82 Funds and 77
FIDCs
Fifteen years of experience managing FIDCs
No failures because of fraud or poor management
Loan-level data
Average FIDC Size is R34 million
Processing Efficiency Aids Risk Management
Benfords Law and Defaults
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Developed Market Tools Our Strengths give us our
Competitive Advantage
R2.5 Billion under management, 82 Funds and 77
FIDCs
Fifteen years of experience managing FIDCs
No failures because of fraud or poor management
Loan-level data
Average FIDC Size is R34 million
Processing Efficiency Aids Risk Management
Benfords Law and Defaults
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Superior Strategy Highly Diversified Portfolios
FIQ FIDC San Gabriel Strategy
Typical FIQ FIDC Strategy
Many Small FIDCs
FIDC Low Risk
FIQ FIDC LASFA
FIQ FIDC X
FIDC High Risk
Specialized FIDC
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Investment Process Applying Best Practices to
Find Value
We integrate fundamental credit research with
quantitative credit tools to arrive at buy
decisions
Interest Rate Paths and Default Scenarios

• Due Diligence and Fundamental Credit Analysis
• Evaluate deal managers experience
• Thorough on-site inspection
• Verify deal managers not tied to shell companies
• Check deal manager transaction history
• Disciplined underwriting and servicing
• Decision structure well defined
• Fully analyze the collateral performance must
  meet risk/return objectives

Yes Passes All Tests
Deal Accepted Move to Quantitative Testing
Model-Driven Quantitative Analysis
Build Waterfall and Triggers
Complete Cash Flow Model

• Structure provides return/risk payoffs that beat
  the hurdle rate in the worst case scenarios
• Structure Provides Better Payoffs than other
  opportunities

No Deal Rejected
No Deal Rejected
Yes Passes All Tests Go to Portfolio Risk
Evaluation
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Continuous Performance Surveillance Models are
the Best Forensic Tools
Step 1 Periodic Due Diligence Quarterly visits to servicers to verify that underwriting and servicing standards are being maintained (Evaluation by US and Brazilian Representatives)
Step 2 Modeling The model uses our proprietary database, daily loan-level updates, and arbitrage-free interest rate scenarios to provide up-to-date information and consistent prices for the assets relative to the investor tranches
Delinquency Scenarios from Vector Auto-regression
Model
Interest Rate Scenarios
Performance Reports Data to Investors
Monitor Actual versus Model Performance
Rules-based Cash Flow Engine (Waterfall)
Pricing Scenario Analysis Benchmarks
Risk/Return Profile
ReturnEngineer Database Provides Updated Deal
Information
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Risk Management
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Risk Management Portfolio Management Process
Evaluate the collateral and due diligence
Study all of the documents By-laws and prospectus
Set up proprietary cash flow model and collateral
assumptions
Run stochastic analysis on the FIDC
Monitor Use the model results as a performance
benchmark
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LASFA Monitoring Reports
Risk Management Risk Tools Static Risk
Reports
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Latin America Structured Finance Advisors
Summary Modern Portfolio Management meets
Inefficient and Unstructured Markets
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Contact Details

• Vernon H. Budinger, CFA
• CEO
• Latin America Structured Finance
• vbudinger_at_latamsfc.com
• 710 S. Myrtle, 519, Monrovia, CA 91016
• USA  1 626 664 9017
• Brazil 5511 8674 7950
• http//www.latamstructuredfinance.com