In Argentina's domestic market, the stream of consumer and export-related deals flows on. Companies in both sectors have benefited from the economic revival and are cashing in on ever cheapening rates.

But this brighter picture has its nuances. Pension funds, those traditional pillars of a robust bond market, appear to be pulling back, sources said. "The rates are just not attractive for them, so they're keeping a lot of money in [treasuries] and time deposits," said Sergio Capdevila, head of trust services at Banco de Valores.

Pricing on securitizations keeps tightening just the same, as banks and other investors fill the gap left by the funds. But originators shouldn't let this investor class off the hook for too long, as banking liquidity will inevitably dry up once long-dormant investment alternatives come alive. That could blow out yields if funds are still playing hard to get.

The irony of the current situation is that it was the funds' heavy exposure to government paper that sunk their portfolios during the crisis. In addition, they were force-fed treasuries in the months ahead of the financial collapse of December 2001. Nonetheless, it appears that domestic treasuries have re-emerged as the safest instruments and securitizations offering spreads in the ballpark of 200 basis points are not "yieldy" enough to entice the funds.

Overall, though, investor demand has been steep enough to sustain Argentina's securitization machine. The team of Banco de Valores and Compania Inversora Bursatil were as busy as ever in the fourth quarter. On Nov. 18, they closed Garbarino XIV, which comes off a personal loan-backed program for the namesake department store. A senior piece worth Ps8.7 million (US$3 million) priced at 7.2%. The duration is four months, while the final legal maturity is nine months. Standard & Poor's rated the deal raA+' on the national scale.

The personal loans comprising the collateral are extended through the "Garbarino Card." Enhancement comes from a couple of junior tranches totaling Ps5.3 million (US$1.8 million). Banks purchased 36% of the deal; pension funds bought 28%; insurance companies, 22%; and retail, 14%. Demand hit nearly 3x. Nicholson y Cano provided legal counsel.

With 40 stores scattered throughout the country, Garbarino peddles white goods, electronics and computers. The parent company runs a smaller chain, Compumundo, which has benefited from the securitization program as well.

Just a day after Garbarino, the Valores-Inversora duo closed a US$2.2 million transaction for rice producers, the fourth transaction off a program for small and medium-sized companies. With a maturity of 270 days, Secupyme IV priced at 5.98%.

Thanks in part to a surety from Garantizadora - an agency mandated to bolster this sector - Moody's Investors Service rated the deal A1.ar'. That mirrors the creditworthiness of Garantizadora. Backing the transaction are export sales receivables originated by an estimated 45 rice growers. Proceeds will finance the 2003-2004 crop season. Banks and private companies bought 64% of the deal. Pension funds took a meager 10%.

Under the structure, the participating farmers have signed export contracts with Molinos Libres. The designated exporter is controlled by Glencore, a commodities concern headquartered in Geneva, Switzerland. Alchouron, Berisso, Brady Alet & Fernandez Pelayo were legal

counsel on the deal.

Consubond XXI rounds out the batch of recent deals led by Inversora and Valores. Rated A+(arg)' by Fitch Ratings, the senior tranche of this series reached Ps16.6 million (US$5.7 million) making it a relative giant in this sector of Lilliputian paper. The deal closed Dec. 4 and priced at 6.75%, a sign that falling rates among banks continue to reverberate in the securitization sector. In fact, banks snatched up 48% of the transaction, while pension funds took a paltry 14%. With similar features, Consubond XX, which closed in September, yielded 9%.

The duration for Consubond XXI is six months, the legal final maturity 11 months. Collateral is made up of consumer loans originated by Banco Saenz. The deal enjoys an enhancement from two subordinated pieces totaling Ps4.1 million (US$1.4 million).

Up ahead is Confibono II, with a senior tranche sized at Ps13.7 million (US$4.7 million). Collateral is comprised of consumer loans originated by department store Bazar Avenida and Consumo, with contributions to the pool of 75% and 25%, respectively.

And timed to price as early as this week is a securitization of personal loans originated by Banco Banex. The borrowers of the pooled credits are retirees and state employees of the state government of San Luis. Loan payments are automatically debited from pension checks and paychecks. A 30% subordination further bolsters the creditworthiness, which Moody's has assessed at Aa2.ar' on the national scale. While financial consultancy Infupa structured the deal, Banco Societe Generale is the underwriter. The senior tranche is sized at Ps21 million (US$7.2 million) and the expected final maturity is nine months.

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