Argentina is taking advantage of the positive fallout following the recent interest-rate cut in the U.S. by the Federal Reserve, by coming to market with deals that were scheduled to close by the end of 2000. However, the country is still showing signs of trouble with the recent downgrade of five ABS transactions from Standard & Poor's Ratings Services.

IRSA's Tarjeta Shopping is expected to come to market with a $15 million domestic credit card-receivables deal led by HSBC next week. The credit card was created nearly four years ago in order to provide a source of financing for customers. This transaction marks the second of its kind for the company, following a similar deal that closed last year, which also totaled $15 million.

The political unrest and the financial turmoil throughout the country delayed the transaction from closing prior to the end of 2000. However, S&P provided a national scale rating of RA-AAA, prior to year-end.

Furthermore, two additional deals are said to be in the Argentine pipeline that are expected to close in the coming months. The first is a "beef-receivables" transaction with sales made to Campbell's Soup to the tune of $50 million. J.P. Morgan Chase & Co. is said to be leading the deal, but did not respond to phone calls. The other deal is an MBS transaction that will follow on the heels of previous transactions.

According to Juan Pablo De Mollein of S&P Argentina, the market has improved and therefore deals that were in the pipeline and were unable to close before the end of 2000 may begin coming to market. "It [the situation in Argentina] has gotten better since the beginning of the year," De Mollein said. "There has been good news - the decrease in interest rates from the Fed in the States and the implementation of several changes on the political side have been showing a lot of commitment to the market from the government with respect to reforms, the health system, the pension fund system. You might be seeing several other issuers that were delayed or that were waiting for an open window to see if the market was in a better shape to issue."

While the Argentine market is demonstrating signs of improvement at the moment, the future outlook among analysts is not positive. Accordingly, S&P downgraded five structured finance transactions last week and removed them from CreditWatch negative, following the respective company downgrades. All five transactions were bumped to BB+ from BBB-, still two notches above the Argentine sovereign rating.

Additionally, S&P removed four ABS transactions from CreditWatch negative and affirmed its BBB- ratings.

"It's complicated," said Jorge Solari, of S&P Argentina. "Things are improving but we are always taking forward-looking statements and that is taken into consideration more than what has happened in the last two weeks or what will happen in the next two weeks."

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