Gapped-out interest rates are sucking the juice from ABS issuance in some of the larger emerging markets (see Mexican issuance, p. 19), but not Argentina. Even though the country has fallen victim to the volatility seen around the world, base rates were exceedingly low to begin with. For instance, the yield on Argentina's six-month Treasurys has jumped up 100 basis points to a mere 3% over the last month and a half.

As such, originators are not daunted. In fact, last week no less than four leapt into the market. The entrenched duo Compania Inversora Bursatil and Banco de Valores jointly arranged these deals, except for ProArg I, an olive transaction with Valores as sole lead.

A downsized Ps35.3 million (US$12 million) deal for three units of leading U.S. power company AES Corporation priced at par. Demand did not hit the Ps45 million (US$15 million) cap on the program, according to a source familiar with the deal. That might have something to do with the power crisis hanging over the Argentine economy. With a legal final maturity of 2.5 years and duration of about 1.5 years, the bond pays an annualized yield of 10.25% in the first quarter. For the subsequent quarters, the bond morphs into a floater, bearing a spread of 400 basis points over the benchmark CER rate. Yield oscillations are constrained by a 9% floor and 15% cap. Collateral is comprised of existing and future credits (for details on the structure, see ASR 5/10, p.1).

Backed by olive and olive oil exports, the US$3 million ProArg I priced to yield 8%. The expected maturity is 255 days and the transaction brings together three originators, Solfrut, La Aurora and Biolive (for further details, see ASR 4/26, p.21)

Finally, two consumer transactions that closed last week came off busy programs. The Ps14 million (US$4.7 million) senior tranche of Megabono IV yielded 5.7%. Fitch Ratings rated the piece AA-(arg)' on the national scale. The average life is three months. Finally, the Ps18 million (US$6.1 million) senior tranche of Garbarino XVII priced to yield 6.15%. Rated raAA-' by Standard & Poor's, the piece has a duration of 3.9 months.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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