With Argentina's wireless communication industry increasingly competitive, wireless phone service provider Telecom Personal has turned to securitization as a way to raise funding to improve its technological edge against rivals Bell South and AT&T.
The company first considered an IPO but ended up opting for a securitization. "They were working with Bank of America and they advised them that a securitization would be cheaper," explained Juan Pablo de Mollein, an analyst from Standard & Poor's in Argentina. "The company has a very good credit quality and this was the best way to go."
The P70 million deal ($70 million), called Titan-Telecom Personal 2000 Class 1, is backed by promissory notes from Telecom Personal and is expected to launch later this month. The notes were rated AAA on the national scale by S&P and have bullet maturities in August 2002 and August 2003.
"The high ratings are a reflection of Telecom's market share and its financial strength," said Mollein. "Also important is the fact that the company has the backing of parent company Telecom Argentina STET-France Telecom S.A."
Sources agreed that the need for funding to invest in advanced wireless technologies, added to the fact that Argentina's ABS issuers are evolving from mainly banks to corporates, will make deals such as this a regular feature of the market.