Finacity Corp. recently closed a trade receivables transaction for Papel, Carton y Derivados, a Mexican paperboard and containerboard maker that markets under the slogan "PCD does it for you."

The deal's senior tranche totaled Ps270 million ($27 million), with a maturity of seven years and a rating of ‘mxA' by Standard & Poor's. Pricing was undisclosed, and the deal does not carry a global scale rating. Finacity wore the hats of arranger, master servicer and bond administrator.

The transaction went to a single, unnamed investor. Enhancement was provided by a subordinated piece that the originator retained. Typical for a trade receivable transaction, the subordination level oscillates every day.

As a bond administrator, Finacity generates daily reports for the different parties in the transaction. "Trade receivables are very intensive assets; things can and do happen to them daily," said Finacity CEO Adrian Katz. "They can be outstanding for only thirty days, which necessitates thorough and detailed reporting." The originator performs the regular servicing functions.

He added that the current credit environment favors trade receivable transactions. Finacity has more of these deals from Mexico in its pipeline.

The transaction has only a single rating. "It's a fairly small deal," Katz said. "It didn't necessitate more than one rating to satisfy the investor."

Headquartered in Celaya, Mexico, PCD generates about $1 billion annually in sales. The last time Finacity landed in the pages of ASR was with an airline receivables deal linked to Northwest Airlines (ASR, 2/17/07).

(c) 2008 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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