Argentine investment bank MBA Banco de Inversiones SA timed its latest local securitization just right: the A$30 million deal placed around three weeks ago for Banco San Luis was more than two times oversubscribed, largely due to pent-up demand from Argentina's pension funds.

The investment bank is now prepping a first-time auto loan securitization for Banco de Suquia. But with rumors rampant last week - though denied by government officials - that Argentina could devalue the peso and abandon convertibility, the launch date will depend on when the market stabilizes, according to a source at MBA.

"At the launch [for Banco San Luis], pension funds wanted the investments," he explained. The deal was even upsized to meet the strong demand. "Today, we'd find fewer buyers," the source added.

Banco San Luis issued its A$30 million deal, split into two senior tranches and a subordinate tranche, through a trust called BanEx Serie I. According to MBA, the deal is only the second revolving structure backed by deferred payment checks, following the debut of the asset type in December by Banco Transandino, which also issued through MBA's securitization program for small banks (ASRI 1/11/99, p.13).

Deferred payment checks are similar to promissory notes. Issued by small and mid-sized companies, they pay down in around 45 days. With the revolving structure, the maturity on the securitization was extended, however; the A$20 million first class had a duration of two years while the second tranche had a duration of six months.

Both senior classes were rated triple-A by Duff & Phelps and Fitch IBCA. The two-year securities priced with a coupon of 13.78% to yield around 100 bps over the comparable Argentine government bond in the domestic market. The shorter class carried a coupon of 10.25%.

The B piece, with a two-year duration, totaled around A$6 million and was rated single-B by the agencies. Pricing terms were not available at press time.

"The most important aspect [of this deal] was that demand was more than two times the offering," noted Fernando Pesci, a banker with MBA. "It's very unusual," he said, adding that securitization is still a relatively new instrument in Argentina.

More than 85% of the deal went to institutions, he noted. Asset managers purchased around 18% of the deal, while insurance companies bought 15%. Commercial banks accounted for 8%, and private banking around 9%.

MBA's new deal for Banco de Suquia will be dollar-denominated and is currently slated for launch in the next month or so. The timing will depend on when the market stabilizes and when pricing is favorable for the issuer, Pesci said.

Argentine issuers and their bankers in general were hoping to see the market stabilize for a period before the country's presidential election in October, which is expected to dampen market activity. - JB

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