With the Argentine export machine in overdrive and a convalescent bank sector loath to extend credit, securitization remains the only game in town for many agribusiness companies. Producers of olive oil and olives are the latest to join up. "Banks aren't providing financing...and [companies] are going straight to the market," said Santiago Pino, president of financial consultancy GSW.

But that market has its own constraints, as illustrated by the persistence of small deals with short maturities. An upcoming transaction for three olive companies structured by GSW totals US$3 million and has an expected maturity is 255 days. The deal marks a first for the consultancy, which began operations a year and half ago.

In other ways, ProARG I is the kind of export deal that has been popping into Argentina's domestic market every couple of months over the last year or so. The products involved, however, are a heartening sign that structured funding is spreading to players outside the traditional agricultural sectors like soy, corn and seeds. "While [olive producers] are still not global players, their exports have increased sharply," said Mauro Chiarini, an associate director at Fitch Ratings in Argentina.

Banco de Valores will place the deal and Vitale, Manoff, & Feilbogen is legal counsel. Fitch has rated the transaction A3(arg) on the short-term, national scale.

The originating trio is Solfrut, La Aurora del Sur and Biolive. Each will provide a promissory note to the trust equal to its share of the bond proceeds, which are US$2 million, US$700,000 and US$300,000, respectively. The notes are backed by future exports and further guaranteed by inventory of olives and olive oil.

Solfrut is an agribusiness company operating in the province of San Juan since 1992. Exports of extra-virgin olive oil are projected to hit US$3.3 million this year, more than three times last year's figure. Chile, the U.S. and Brazil are the leading importers of its products. Overseas Trading and Gemsa/Italcal are among its foreign clients.

Belonging to a major economic group in Argentina, La Aurora will be securitizing exports of olives, expected to equal about half of total olive sales in the upcoming season. Buyers are in Brazil, Germany and the U.S.

Finally, perched at the high end of the value-added chain is Biolive, which sells pricey organic olive oil. The bulk of exports go to a single California firm, Spectrum.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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