Local securitization is getting underway again in Brazil now that financial markets are starting to recover and local interest rates are dropping.

Trikem, the petrochemical company, has mandated a local investment banking firm, Pentagano, to structure a securitization in the domestic market, sources said. Details were not yet available and company officials could not be reached last week.

Trikem is not a newcomer to securitization. The company completed a $100 million private, cross-border export deal through Banco Bilbao Vizcaya in 1997, an innovative transaction that was the first to use a supply bond (ASRI 10/5/98, p.1).

Also in the works now is an unusual deal backed by real estate revenues on gas stations, according to a source in Sao Paulo. If completed, the deal will hit the market in the next month or two, the source said.

The issuer, which was not identified, leases real estate to the major petroleum companies for gas stations. With these corporate credits - such as Shell, Exxon, or Petrobras - as obligors, the transaction would be a strong one, the source explained. Aside from the performance of the oil companies, the main risk would be that the issuer continues to lease to those specific oil companies.

"Foreign petroleum companies are just entering Brazil's market, so there's a lot of potential," the source explained.

Corporate assets such as these may be the most eligible for securitization right now, an investment banker noted. "The quality of receivables in a recession is not too high," he explained, and it may take some time before domestic securitization, especially that involving consumer loans, can take off in Brazil as a result.

- JB

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