Leading Mexican appliances retailer Grupo Elektra recently completed its Ps200 million ($21.3 million) securitization of account receivables. The deal was placed in the local market.
The transaction received local ratings of double-A from Duff & Phelps (DCR) and double-A-plus from Fitch IBCA. The notes featured a 13% coupon and a two-year final maturity.
The deal constitutes Elektra's fifth asset-backed deal, in a series that started in 1997. The proceeds will be used to reduce the company's other debts, which are estimated at $415 million. The underlying assets are originated from Elektra's Ps9 billion in annual sales, of which some two-thirds involve credit sales to low and middle-income customers.
According to sources familiar with the transaction, the fact that the company's credit portfolio is in pesos made it easier to raise funds through the domestic market, avoiding any convertibility risk premium.
Elektra is expected to securitize some Ps150 million before year-end. Though the deals are expected to take place in the local market, sources close to the company did not rule out the possibility of accessing the international debt markets.
Columbia's Serdan preps debut
Colombia's Serdan S.A. is getting ready to attempt its first securitization of account receivables. Serdan, an outsourcing company which services holding company Bavaria S.A., will offer up to Cop20 billion (around $10 million) in notes. The transaction has a preliminary double-A local rating from DCR. Corredores Asociados, a local bank, is acting as the deal's arranger.
Local deals brewing in Argentina
Following two securitizations of credit card receivables for its subsidiary Tarjeta Naranja, Banco de Galicia y Buenos Aires is now mulling a similar offering for a group of regional credit card issuers.
This local deal would involve three or four regional credit cards issuers and would be worth around $45 million. "The receivables generated by each credit card are too small to launch separate securitizations," explained a source familiar with the deal. "That's why Banco de Galicia is combining them."
One downside of this multi-credit card transaction might be the added complications of working with a variety of servicers, but the fact that all of the credit cards in question are issued by subsidiaries of Banco de Galicia could simplify the structuring of the deal.
Banco de Galicia hit the market with the first transaction for Targjeta Naranja Argentina's first revolving credit card deal in November 1998. The initial offering of $25 million was increased to $50 million due to investor demand.
The second deal for $25 million closed in July of this year. At the time, there was speculation regarding the success of the transaction, with some sources suggesting that the bank wanted to issue around $50 million but decided to downsize the offering due to lack of investor appetite.
According to an official at Banco de Galicia, however, the offering garnered investor interest for $37 million but the bank decided not to increase the $25 million offering to avoid creating an excess of funds and to keep the receivables for a future securitization.
Meanwhile, securitizations of deferred payment checks are gaining popularity in Argentina's local market. On the heels of two successful transactions by MBA Banco de Inversiones SA for Banco Transandino (ASRI 1/11/99 p.13) and Banco San Luis (ASRI 5/31 p.12), ABN AMRO is currently working on a similar deal for Banco Privado.
The collateral is a portfolio of deferred payment checks representing promises of payment in the future from small and medium-sized companies. Securitization of these assets is usually approached by small banks and, despite some legal questions, they are becoming a regular feature in the local market. "The legal problems are diminished by the fact that the notes have only a 180-day life span," said a source. "There is a definite niche for this kind of paper and I think we will be seeing more deals of this kind hitting the market on a regular basis."