Faced with sparse alternatives, Argentine investors flocked to Megabono II, the latest consumer deal from Compania Inversora Bursatil and Banco de Valores, which closed Oct. 30. The stampede squeezed the yield on the senior piece to 7.9% from the coupon of 10.75%, the tightest pricing achieved by this pair of underwriters in the seven transactions they have jointly led in the asset class so far this year. The rate compressed sharply from Megabono I, closed June 25.

"There are two things going on. Rates have fallen drastically and there's better overall confidence," said Sergio Capdevila, head of trust services at Banco de Valores, which doubles as trustee on the transaction. Tanking rates are largely a function of the lack of paper for domestic investors.

The senior tranche amounts to Ps10.4 million (US$3.7 million), while the two subordinated total Ps2.6 million (US$907,000). The maturity is 10 months, with a duration of 4.2 months.

While the deal is second in name, it is actually the fourth in a string of securitizations done for a network of stores known as Red Megatone. As members of this cozy group, Carsa, Bazar Avenida and Electronica Megatone share suppliers to achieve economies of scale and avoid competing in the same spots. Some 90% of the collateral underpinning Megabono II is backed by consumer loans originated by Electronica Megatone; the other 10% comes from Confina, which provides loans and other financial services to consumers of the Red Megatone.

Inversora and Banco de Valores have so far placed Ps59 million (US$21 million) in senior tranches this year in the consumer sector.


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