Chile's first two credit card deals are approaching the finish line, with BCI Securitizadora clutching both batons. The securitizer expects to kick off the roadshow for the pair of transactions in about ten days, said Gerardo Spoerer, CEO of BCI, an arm of Chile's Banco de Credito e Inversiones.

The transaction scheduled to close first - perhaps at the end of October - is a 3.5-year, Ps70 billion (US$94.2 million) securitization of credit card accounts originated by Ripley, a local department store that started out middle-market, but has recently made inroads into more affluent segments.

Thanks largely to a 40% overcollateralization, a 24% discount factor used to purchase receivables, and Ps2.86 billion (US$3.9 million) reserve account, that deal's Ps40.5 billion (US$54.5 million) senior tranche carries a triple-A rating from Moody's Investor Services affiliate Humphreys and Standard & Poor's affiliate Feller Rate (see ASR 8/26 p. 15). "Ripley wanted to open the door with a triple-A; that's why we did this super-collateralized deal," Spoerer said. Payments are quarterly, and the bond amortizes during the last year.

Downmarket from Ripley is BCI's other deal, a 3-year Ps25 billion bond (US$33.7 million) with a Ps15.25 billion (US$20.5 million) A class rated double-A by Fitch Ratings and Feller Rate. Department store La Polar is generating the credit card accounts that back the deal. The structure is similar to that of Ripley, though La Polar caters to low- and middle-income sectors. Saddled with debt and a poor reputation just a few years ago, La Polar has cleaned up its act following its takeover by international fund Southern Cross.

The credit card deals are hotly anticipated, not least because they bear nominal peso denominations, a rarity in a market still clinging to inflation indexation. The profitability of such deals should remain high with a yawning spread between rates consumers pay and the pricing foreseen for the first few transactions, analysts say.

Other segments meanwhile are losing their luster among securitizers. Residential mortgatge rates, for example, are tightening faster than rates overall, analysts say. "The drops are being passed onto consumers," said Matias Acevedo, senior director at Fitch Chile. "The gains to be had for mortgage-backed deals are falling."

MBS will undoubtedly remain the market's backbone for some time, however. Among the deals in the works, BanChile Securitizadora is structuring what may turn out to be the largest domestic MBS ever, at the inflation-indexed equivalent of US$65.9 million. Banco del Estado is heard as the originator.

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