Traditionally the poor cousin to Latin America's larger issuers, Central America won respect in 2002. As deals evaporated elsewhere, New York bankers descended on the sleepy countries of the isthmus.

Though some transactions - like Banco Salvadoreno's MT-100 - remain on hold (see ASR 11/25, p.17), at least one made it through right before the holiday break. Led by Salomon Smith Barney, that deal amounted to US$125 million and was backed by credit-card receivables.

The deal spans five jurisdictions, a first for the region. Receivables will come from Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Credomatic International Corp., a large regional player in consumer finance, is generating the merchant vouchers backing the transaction.

Based on 2001 data, Costa Rica would account for 51% of the receivables. Provided that Costa Rica generates the forecast volume, "if we took everyone else out, [the deal] performs fine," said Gary Kochubka, director of structured finance at Standard & Poor's.

S&P rated the deal AAA' thanks to a wrap from Ambac. The stand-alone rating is investment grade as well, bolstered by an enhancement of 34x quarterly debt service under an unstressed scenario and incentives for executing the payments. S&P rates Credomatic BBB-'.

The deal has an average weighted maturity of 4.68 years, with a final maturity of seven years.

Credomatic began servicing international Visa and Mastercard vouchers in the late 1970s. The deal excludes receivables generated from cards issued by Credomatic itself.

While a brisk tourist trade in Central America buttresses the deal, due to its small size and geographic location, the region is acutely vulnerable to natural disasters. The potential for further damage to global travel from terrorist shocks also constrains the stand-alone rating on the deal.

The paper bears a quarterly coupon, paying out a spread over 3-month LIBOR. Salomon sunk it in a CP conduit, a source said.

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