Not too many securitization players are going to remember 2007 fondly. That applies to emerging market devotees too.

Even with domestic markets in Mexico and Brazil braving the liquidity crisis and getting through in fairly good shape, there's still volatility to deal with, and cross-border issuance has yet to return in any meaningful form.

Asked to pick an event that was pivotal for the year in my beat, I picked two. One, the Kazakh banks' transformation from beauties to beasts (maybe that's too strong, let's say from beauties to damaged beauties), is on page 22.

The other is the shutting down of Panterra, a Citicorp North America-administered conduit that clawed its way into the emerging market world, and then went the way of so many other ABCP vehicles.

Citigroup didn't return a call for comment on Panterra.

Established in July 2006, Panterra had become a force in emerging markets by early last year. It hit a growth spurt in the first half, reaching asset commitments of $3.6 billion spread among 18 transactions by the end of July. Meanwhile, its CP outstanding stood at $2.6 billion. The majority of deals were from emerging markets, and within that category, the bulk were financial future flows, sources said.

Panterra's pricing heft was felt throughout the single-A/triple B world. "You had a conduit that was going head to head with the monolines," said a source at one of the bond insurers. Indeed, while the monolines had been piling on Turkish exposure through financial future flows in 2006, they still had room for the asset class last year, from Turkey, and from other countries. The unwrapped future flow investors that had been stalwart buyers when Brazil was more of a player and the markets less liquid (and products offered better yields) now had to compete with a Panterra bid on top of the monoline bid. "They were coming at it aggressively, further displacing the traditional future flows unwrapped investor," said a market source.

It's not that Panterra would take anything. It had its standards. Explicitly, for future flow receivables, sellers were required to reside in countries whose cross-border sovereign debt were rated at least Ba3' by Moody's Investors Service and BB-' by Fitch Ratings, with a cap of 20% of the maximum program limit for originators in countries rated at least B3' and B-', respectively.

Fitch and Moody's rated Panterra F1' and Prime-1', respectively.

Then as the liquidity crisis engulfed the ABCP world, Panterra succumbed. By the end of November, the conduit had repaid all of its paper. Sources said some deals were re-wrapped and put in other conduits. Soon after the shutdown, Standard & Poor's assigned ratings to deals for El Salvador's Banagricola, National Commercial Bank of Jamaica, and Central American multi-jurisdictional Credomatic, all of which had come out in years prior to 2007. The word is that these transactions came from Panterra, which as a conduit without an S&P rating didn't require the agency's ratings on its asset commitments.

With Panterra gone, and a number of the monolines going through their own host of troubles, there might be room for those unwrapped emerging market investors that had been priced out to elbow back into the marketplace. That is, if originators can get comfortable with wider spreads. It's still too early to tell, sources said.

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

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