The cross-border Latin American market witnessed the close of one deal last week, a $100 million, seven-year securitization of diversified payment rights by El Salvador's Banco Cuscatlan. Sole lead Citigroup Global Markets was understood to have dropped the deal into a conduit and pricing details were unavailable at press time.
Wrapped by Ambac, the deal earned triple-A ratings from Fitch Ratings and Standard & Poor's. The transaction breaks new ground by pulling additional countries into a structure that introduced the multi-jurisdictional DPR deal in September 2003. For the first time Cuscatlan units in Panama and Honduras are contributing their DPRs to a transaction, joining their counterparts in Costa Rica and Guatemala, and, of course, the host country of El Salvador, which still accounts for 70% of total flows.
Three correspondent banks that channel more than 90% of Cuscatlan's DPRs have signed on the transaction, agreeing to shift payments into the issuing trust.
The transaction brings the total amount issued under Cuscatlan's DPR program to $370 million. About $305 million is currently outstanding, according to an S&P report.
Both Fitch and S&P rate the underlying credit strength of the transaction triple-B and, the corporate, double-B. Cuscatlan is El Salvador's second largest bank, with shares of the deposit and loan markets of 22% and 21%, respectively, at the end of 2004. The bank is controlled by Corporacion UBCI, which is the second largest Central American-based conglomerate, according to Fitch Ratings.
Timed to issue this week is a $500 million DPR transaction from Turkey's Garantibank. The deal is broken up into four tranches, three of which are insured, each by a different monoline guarantor (see ASR 9/12/05). Led by Standard Chartered, the deal is backed by money flows from 10 correspondent banks, which represented 78% of payment orders in dollar terms during the first half of 2005.
Garanti's DPR volume is well diversified, according to a report by Moody's Investors Service. Export clients contributing to the flows number about 26,000 and DPRs flow in from more than 94 countries.
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