Moody's Investors Service knocked a telecom securitization from Peru down two pegs to Baa3' last week. Telefonica del Peru Grantor Trust had already dropped a couple of rungs from A1', where it stood at close in December 1998. Backed with flows stemming from calls between Telefonica del Peru and international carriers, the transaction has US$39 million outstanding, thanks in part to a US$55 million prepayment. Totaling US$150 million at issuance, it matures in 2008. Pre-merger JP Morgan was underwriter.

The transaction has been assaulted on both the domestic and foreign fronts. Many of the designated carriers that originate the securitized payments have been in trouble since 2000. "It's very much related to the trouble of telecoms in the state," said Christian Corcino, senior associate of Latin America structured finance at Moody's. Among the designated companies are AT&T, WorldCom, and Sprint, all of which are in significantly worse shape than when Peru Grantor came out five years ago.

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