It couldn't have come at a better time - Fitch has announced a merger between DCR Central America and Fitch El Salvador - in the midst of several nascent local markets in Central America.

The new company, Fitch Central America, has two offices one in Costa Rica and one in El Salvador, and both offices will primarily focus on rating domestic transactions throughout Central America. Additionally, the new entity will also provide support for cross-border transactions coming out of the region.

The timing is perfect, according to sources. There are many local deals in the market. "It's amazing how many deals are going on in Panama," said one Fitch analyst.

While there has been some mention of the deals in the pipeline from Banco del Ismo and Banco General (see ASR 5/28/01 p. 16), Fitch also noted that Panama's La Hypotecaria, a financial housing company, is now in the local market with a mortgage-backed securitization. The deal is scheduled for a road show in about two weeks.

However, Panama is not the only area of the region that has deals in the pipeline. Fitch is also looking at a future-flow transaction out of El Salvador. And, Costa Rica recently hit the local market with a transaction from Universidad Latina. The $10 million deal was a future-flow of student fees and obtained a national scale rating of crAA from Fitch. Sources also say there are other deals in the early stages in Costa Rica.

All in all, Mauricio Choussy will lead the management team, and Guillermo Zuniga will be the head of corporate and structured ratings. Christina Alvarez will be the head of financial institutions ratings.

There will be eight people between the two Fitch offices. "As a result of the merger, we have a very strong regional rating company," Zuniga said. "The strong rating agency will help the securitization market."

"Capital regulators have been promoting capital market development in [Central America] and as that happens, there is growing demand for the use of ratings and so we do see growth opportunities in the region," added a Fitch executive.

Prior to Fitch's acquisition of Duff & Phelps Credit Rating Co. (DCR), DCR had an interest in Central America and at the same time, Thomson Bank Watch had a business in El Salvador. When Fitch purchased both entities, the two were competing against each other. The formation of Fitch Central America is now a controlled and consolidated entity.

"When we had two companies, there was some duplication and shared responsibilities. It will be very clear now, there has been a clarification of responsibilities," the Fitch executive.

Fitch now has 11 offices throughout Latin America and with about 100 analysts, the company provides ratings for nearly 1300 issuers in Latin America, both nationally and cross border.

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