Brazil Equipment Leasing Seen Slowing

LatAm equipment leasing activity is growing quickly, especially in Brazil, according to a new report by The Alta Group, a global consultancy serving leasing and finance companies. However, Alta warns that Brazil’s heady growth is likely to slow in 2008-2009 due to a number of factors, including a preponderance of motor vehicle leases in portfolios. The group’s latest report on the sector shows LatAm equipment leasing increasing by 81% in US dollars, or 71% adjusted for currency volatility, overall in 2007. “Brazil’s equipment leasing industry, which represents close to 60% of the total leasing portfolios in Latin America, outpaced all other countries and expanded by nearly 105%,” says Alta, which cites sound regulation for the country’s success. It adds that a large percentage of leasing portfolios is concentrated in motor vehicles, a market that appears to be reaching saturation. Brazil’s longer term growth is buoyed by a well developed agricultural industry and potential to increase leased assets for agricultural equipment, construction equipment for infrastructure projects and technology. Elsewhere, Venezuela was up 72% in 2007, boosted by liquidity, while Costa Rica jumped nearly 95% in 2007, says Alta. Equipment leasing gains generally correlate with increased capital investment and the expansion of wealth, says the group.