The National Commercial Bank of Jamaica issued its, and the country's, first DPR transaction March 15. The $100 million, seven-year final deal priced 180 basis points over three-month Libor via sole lead Credit Suisse. Fitch Ratings and Moody's Investors Service rated the transaction BBB-' and Baa3', respectively.

The deal closes March 22. Dewey Ballantine and Mayer, Brown, Rowe and Maw are legal counsel for the originator and arranger, respectively.

One of the deal's features is a coupon step-up of 50 basis points, which is triggered if either agency dunks its rating below investment grade. While new to DPRs, NCB has already backed deals with credit card vouchers.

NCB dominates the banking sector with rival Bank of Novia Scotia. The two control more than 70% of the island nation's banking assets, with the other 30% split among much smaller banks.

Remittance processing is one of NCB's core activities and provides critical support to other businesses of the bank like international trade finance. The designated correspondent banks for the structure account for 90% of NCB's DPR flows.

In 2003, 2004, and 2005, the bank's average quarterly DPR flows were roughly $183 million, according to Fitch.

Based on recent figures, the agency estimated that NCB's future flow deals make up about 10% of total liabilities. Additional issuance could exert downward pressure on the rating, Fitch added.

A government bailout of the bank during a crisis in 1997 left NCB with heavy exposure to the sovereign credit. Sovereign bonds and loans to public entities still make up most of NCB's assets. On the flip side, the government has a vested interest in keeping the bank afloat, Fitch said. Moody's rates the government of Jamaica B1' on a foreign currency basis, while Fitch doesn't publicly rate the government. As in other DPR structures, certain features protect the transaction from sovereign interference.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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