Chile's Banco Santander is back with a domestic bond packing government risk. Sized at 1.27 million inflation-indexed units (UF) (US$30 million), the transaction will be backed by future payments to a road concessionaire from the Ministry of Public Works (MOP), an asset Santander introduced in January. "We're aiming for the same structure," said Maria Paz Hidalgo, the CEO of Santander Securitizadora. Like its predecessor, the upcoming transaction will be divvied up into different maturities to match the timing of the government's payments.

At the time of inaugural placement, MOP faced bribery accusations against some of its officials. Institutional investors could have snubbed the deal, but in the end they bought in, mollified by the ministry's impeccable record in making payments. Concerns of malfeasance are unlikely to dog the second transaction, as the scandal has died down in the last several weeks. More importantly, the outstanding deal has already pre-paid its shortest tranche, set to mature in February 2004. While maturities for each tranche are fixed in February of each year, the corresponding disbursement from MOP is timed for the preceding April, giving the trust ample time to make good on payments.

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