MT100 deals are adding color to the Latin American market these days, as more and more electronic-wire transfer transactions make their way across the region. Brazil-based Banco Central do Brasil and El Salvador's Banco Cuscatlan and Banco Agricola are catching on to the times as they prepare deals that are expected to close before year-end.
Merrill Lynch has won the mandate for Banco do Brazil's unwrapped MT100 transaction. The deal will feature a master trust, which will allow more of the like to come to market in the future.
Earlier this year, Banco Central do Brasil graced the market with the country's first-ever financial future flow transaction. Merrill Lynch also led the $250 million fixed-rate, worker-remittance deal. Nikkei Remittance Trust was established in Banco Central do Brasil in Japan so that Brazilians working in Japan are able to deposit yen or American dollars into the trust and the money is then transferred to the assigned account in Brazil in real. (See ASR 07/23/01).
According to sources, despite the Argentine contagion problems affecting Brazil, the worker-remittance deal is performing as expected and has not experienced any problems in flows and was well received by the market. The current deal will be similar in that it's the same issuer; however, unlike the last Brazilian deal, the assets in this deal are MT100s, which can be composed of business-related flows as well as personal cashflows, whereas the previous deal was comprised solely of personal cashflows.
The MT100 deal will make the transfers via the SWIFT system - the internationally created system to facilitate the flow of transfers. The wire transfers from non-Brazilian banks will be sent to a bankruptcy-remote trust, which has issued debt certificates secured by the future flows. The structure is the same as the MT100 deals brought to market earlier this year by Banco de Credito de Peru (BCP) and late last year by Mexico's Banco Nacional de Mexico's (Banamex - See ASR 1/08/01).
"It's a good time for the client to come to market because the rates can be lower because interest rates in general throughout the world have moved," said one market analyst. "It's similar to the Nikkei deal - it's a strong name and the market was very favorable to the first deal and that's what's expected for the second one, in terms of investor interest."
Moody's Investors Service and Standard and Poor's are rating the deal and S&P is expecting to assign a triple-B-plus rating to the transaction.
El Salvador's Banco Cuzcatlan and Banco Agricola are expected to make history with the country's first-ever MT100 transactions by year-end. The structures will be similar to Branco do Brasil's MT100 deal, and, according to IFR Markets, Barclays is leading Banco Agricola's $50 million to $100 million five-year transaction. XL Capital is providing a wrap. Banco Cuzcatlan is also prepping an estimated $100 million, five-year MT100 deal to market via Salomon Smith Barney.