Banco Bansud is tapping the Argentine market with two separate securitization transactions, both backed by loans made to provinces and guaranteed by future tax payments to the federal government. One deal, worth $234 million and already in the market, is being lead managed by WestLB and Banamex; the other, worth $327 million and scheduled for around two weeks time, has Morgan Stanley Dean Witter in charge. The loans that back the transactions were made by Bansud to the provinces of Chaco, Corrientes, Formosa, Rio Negro, Tierra del Fuego and the municipality of San Miguel de Tucuman (capital of the province of Tucuman).

Though individual provinces have accessed the market with notes guaranteed by tax payments to the federal government in the past, this is the first time a deal backed by bank loans to the provinces has hit the Argentine market. "Traditionally, mortgages would be the obvious instrument for securitization," said Carina Lopez, analyst with Duff & Phelps in Argentina. "But most banks do not have enough volume to issue MBS type transactions and [Bansud] opted to package the province's loans."

"Seeing more structures such as these in the future will depend on whether the banks offer the provinces attractive interest rates," explained Lopez. "Otherwise, the provinces might find that it is cheaper to acquire funds by tapping into the capital markets with their own bonds." TH

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