At the bidding of a single investor, El Salvador's Banco Cuscatlan recently issued a US$50 million bond backed by diversified payment rights (DPRs), according to a source. ING arranged the transaction, which funded on June 28. The buzz was that an investor that had a previous Cuscatlan ABS, which was amortizing, wanted to increase exposure to the structure. The transaction came unwrapped, a departure from the last time Cuscatlan tapped its DPR program in the third quarter of 2003 via Citigroup Global Markets. Standard & Poor's and Fitch Ratings rate the current transaction BBB'.

It is the third deal to come off the DPR program for a total issuance of US$275 million. Some US$183 million is outstanding, according to an S&P report. The DPRs backing the program stem from capital flows passing through the bank, such as export payments, worker remittances, export payments and other flows. Cuscatlan is understood to have a LC-backed CP program in the works.

While Cuscatlan made little noise with its investor-driven deal, Peru's Banco de Credit del Peru (BCP) moved even more quietly. The bank issued subordinated notes off its own DPR program, sized at US$34 million, according to a source. Dutch development bank FMO and German development bank DEG purchased the transaction as a way to fund the bank and encourage its activities in socially minded sectors in Peru, such as mortgage origination for low-income homeowners. The development banks themselves orchestrated the deal, which did not feature a traditional arranger. Hunton & Williams provided legal counsel for the buyers, while Cravath, Swaine, and Moore advised BCP. The notes are subordinate to an outstanding US$100 million, seven-year DPR-backed deal issued via ING in 2001. Owing to an MBIA wrap, Moody's Investors Service and S&P rated that deal triple-A. S&P was understood to have rated the subordinated deal BB+'; at press time, it was not clear whether Moody's assessed the transaction.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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