The dry Argentine market will soon dampen with deals as some local issuers are mulling over structured transactions in anticipation of the sovereign debt swap, which is currently in its final stages.

"The Argentine government hasn't been issuing debt for the last month so it's difficult to find a benchmark for local issuances and also cross-border ones," said one analyst. "[The benchmark] will be determined once this mega-swap is perfected."

The government will swap long-term debt to short-term paper in order to alleviate the existing pressure on the Argentine government. The current estimated debt owed to investors, banks and multilaterals is $19.7 billion. Credit Suisse First Boston and J.P. Morgan Chase are said to be leading the swap transaction. The bonds that are currently due will be exchanged for bonds of the same principal value with maturities for five, 10 or 20 years.

In anticipation of the debt swap, CTI Norte, CTI Sur, and CTI BCS, subsidiaries of CTI Holdings SA, one of Argentina's four mobile telecommunications services, will issue a combined $15 million ABS called Samsung Trust collateralized by deferred checks. Banco Sudameris is the arranger and trustee.

According to sources close to the deal, the transaction will be more like a program in that it will only have a six-month tenor and it is expected to be replaced every six months. Additionally, Standard & Poor's has assigned a preliminary national scale rating of raA-.

While this transaction marks the first of its kind for CTI, it will follow the same structure as RT Finance, a deal that was brought to market in 1999 by RTSA, an Argentina distributor and supplier of telephone equipment.

Consumer deals similar to Garbarino SA's transaction in February (see ASR 2/12/01 p.27) are also said to be on deck. Once the sovereign debt swap occurs, Argentine issuers will find it easier to come to market.

"It will be a relief because the government will find a solution for its financing for the next four years," the analyst said. "Following that, we don't know really what will happen with the economy. We are not sure if we will see a recovery or not. But for sure, we will probably see a little more local activity."

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.