As Argentina enters Q1, the tone for the securitization industry is little changed since the beginning of the year; perhaps it's a tad brighter, but volumes and asset choices remain narrow. The same two sectors that crept back from the meltdown late last year - exports and consumer assets - remain the only props of the industry. As if to underscore this, one deal in either sector closed last week.

The export-related transaction, Secupyme III, was sized at US$3.89 million and holds a guaranty from Garantizadora, which also structured the multi-originator deal. Banco de Valores is both trustee and placement agent on the transaction, which closed Oct. 8.

Garantizadora is an entity that aims to bolster the small-to-medium businesses in an array of sectors. The state is among the guarantor's shareholders. The transaction may signal a more market-friendly approach by the government, in an echo of what has been happening in the domestic securitization market of Mexico, particularly its capital-hungry housing sector. The Argentine government "is definitely preferring this type of mechanism," said Martin Fernandez, an analyst with Moody's Investors Service, which gave the deal an A1(arg)' on the national scale.

The rating is up a notch from the first two Secupyme deals closed over the last year. As the previous bonds came unwrapped, the Garantizadora surety provided the extra boost.

The bid-to-offer ratio on Secupyme III was over 3X, yet another sign that Argentine investors are hungry for non-government bonds. The aggressive appetite compressed the yield to 6.4% from the 8% coupon on an annualized basis; the tenor is 270 days.

Some 47 agricultural producers originated the sales receivables used as collateral. Their crops are primarily soy, corn and sunflower seeds.

All the sales are being executed abroad by Glencore, a conglomerate headquartered in Switzerland. A behemoth in a variety of commodities, Glencore's turnover hit US$43.7 billion in its 2002 fiscal year. Standard & Poor's and Moody's rate the company Baa3' and BBB' on the global scale, respectively.

Alchouron, Berisso, Brady Alet & Fernandez Pelayo provided legal counsel for the transaction.

Last of consumer trio

Consumer deal Secubono I closed a day before Secupyme. Handled by Banco de Valores and Compania Inversora Bursatil, the Ps5.2 million (US$1.8 million) A' tranche priced at 300 basis points over the BADLAR benchmark rate. The floating yield is constrained by a ceiling of 35% and a floor of 11%. The bid to offer was slightly under 4X. "We had a wide breadth of investors this time around," said Sergio Capdevila, head of trust services at Banco de Valores, which doubled as trustee. Instead of the usual monopolizing by pension funds, the A' tranche was doled out to private companies, insurance companies and mutual funds. Remarkably, retail ate up 20%. The legal final maturity is 11 months, with a duration of 4.5 months.

Fitch Ratings rated the A' piece A+(arg)' and the Ps650,000 (US$229,000) B' tranche, BBB(arg)'. Shareholders of Carsa, the originator, took the subordinated slice. An equity tranche went to Carsa.

Collateral for the deal is comprised of consumer loans. Carsa is a department store operating throughout north Argentina. Branches are slated to open shortly in the cities of Tucuman and Iguazu, the latter being home to a famous waterfall.

Carsa is the last of three deals executed for a trio of retail companies that share suppliers and have agreed to avoid competing in each other's markets. The previous deal in this grouping to close was for Bazar Avenida (see ASR 9/15, p.18).

Consumer credit on the rise

As confidence climbs among consumers, credit in Argentina is on the rise, giving hope to expectations of a more vigorous and voluminous sector in the near future. But signs of the devastating financial crisis that erupted in December 2001 still linger in this asset class. According the Central Bank data, personal loans in the financial sector hit Ps2.7 billion (US$950 million) at the end of September, 22% down in the year to date. Credit card origination has done better, with the stock up 0.5% to Ps2.1 billion (US$739 million).

Recent figures suggest a turnaround is well underway. Most importantly, interest rates have fallen from the lofty heights that had left consumers eschewing debt. The average monthly rate charged consumers purchasing home appliances in a group of 13 stores in the Buenos Aires area dropped to 6.2% in September from 7.7% in August, according to Deloitte & Touche. Rates were sharply higher only several months ago.

Evidencing higher consumer confidence, a survey done by the Universidad Torcuato de Tella began returning more positive than negative responses from consumers in June. Before then, the negative respondents eclipsed the positive ones by at least 55% to 45%.

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