Brazil's Banco BBA Creditanstalt priced a 12-year deal backed by real estate receivables worth R$105.9 million (US$33.9 million) at the IGPM price index plus 12.5%, said a source familiar with the deal. The trust was Walter Torre PIC Companhia Securitizadora de Creditos Imobiliarios (Walter Torre PIC).

The assets are credits, rights and residual compensation amounts stemming from a lease agreement between Volkswagen Brazil (VWB) and Walter Torre Ltd. As part of the deal, Walter Torre Ltd. sold its credit rights to the lease payments to Walter Torre PIC. Standard & Poor's gave the deal an A' on the national scale. Certificate holders will receive monthly interest and principal payments tied to the lease payments.

The issue marks Brazil's first placement this year of real estate receivables certificates. If the 25-year lease ends before the termination date of 2024, VWB is obligated to pay the residual amount. This would be enough to repay the bonds.

The deal represents Volkswagen Brazil risk. As of July 2002, VWB held a 27% domestic market share in passenger cars. In addition, the company ranks as Brazil's fourth-largest exporter, according to Standard & Poor's. On the downside, the company is up against tough competition, as new competitors muscle into the Brazilian auto market. The economic slowdown is weighing on sales as well.

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.