More news about the home page.  With a grueling year of delayed gratification behind them, many Argentines must be itching for a good shopping spree. Nationwide, consumers pulled back as they watched their economy unravel at an alarming speed in 2002. But the free fall is over and a recent poll by local think tank Fundacion Mercado shows stronger consumer confidence, in defiance of the iffy outcome of elections in April. All this has caught the eye of dealmakers, who see opportunities in the revived lending of consumer credit.

"The first deal since the crisis broke is already done and others are coming up," said Mario Kenny, a partner at Nicholson y Cano.

The aptly named Tarjeta Shopping, issued by Tarshop, originated the turnaround deal, which came off a pre-existing program counseled by Nicholson y Cano. Deloitte & Touche Corporate Finance and Sudameris Capital Markets structured the transaction, while Sudameris' brokerage arm placed it.

Carrying an expected maturity of 21 months, a senior piece was sized at Ps9.6 million (US$3.0 million). It priced on Dec. 27 at 300 basis points over Badlar, which currently translates to about 30%. The rate is not so unusual, considering that the collateral is yielding about 37% right now and inflation is still galloping ahead, although it is down from last year's racy 41%. Standard & Poor's rated the transaction a short-term raA-' on the national scale. A subordinated tranche provided a 20% enhancement. The deal is further anchored by the strong performance of outstanding issues on the program.

The bond pays monthly and starts amortizing in mid-2003. Given that consumer credits remain exceptionally short-term in Argentina, the deal is a revolver. A wide variety of stores accept the Tarjeta Shopping card, including Wal-Mart Avellaneda.

Up ahead are other credit card deals. The next will probably be Consubond, a source said. Backed by consumer loans, that deal will probably come at Ps10 million (US$3.1 million), much smaller than the previous 17 series. Subordination is expected to be around 25%. The program's originator is Banco Saenz. The now-defunct Banco Sudameris and Banco de Valores placed the last issue off the program, which was executed in December 2001, at the cusp of Argentina's implosion.

That transaction, worth US$23 million, was actually denominated in dollars with an annualized yield of 18%. Following the pesification of debts, the paper paid back investors in local currency at the mandated one-to-one rate, which fell far below that of the market. It matured before the end of 2002.

Now investors would balk at consumer deals denominated in greenbacks. The only securitizations that can get away with such arrangements are those backed by commodities and other exports, which, on the cross-border front, have been shielded from the upsetting currency translation.

The collateral for the Consalud program are personal loans from Saenz for purchases at the Fravega chain of stores, which sell white goods.

The lingering menace of runaway inflation remains an obstacle to securitization of consumer assets, since they have to be in pesos. In an effort to curb price increases, the Argentine government has prohibited bonds indexed to inflation, a feature that is commonplace in the developed domestic markets of other Latin American countries like Chile and Mexico. "That's been tough to get over," said Juan Pablo de Mollein, associate director at S&P. Tarjeta Shopping opted for a floater, but that is not devoid of risk, sources said.

Both Tarjeta Shopping and Consalud have a history. A sure sign of the sector's recovery will be the emergence of new securitization programs. "The Tarjeta Shopping deal went to the same investors as before," said a source familiar with the transaction. "It becomes a trend when someone new comes out with a transaction and different buyers show up."

As it is, two freshly minted programs may be on the horizon, sources said. Apparently a bank is working on a securitization of MasterCard and Visa receivables. The deal is being talked at between Ps30 million (US$9.5 million) and Ps50 million (US$16 million). Also coming into view is a securitization of consumer loans that are automatically deducted from paychecks or pension plans. That transaction is now envisaged at Ps30 million (US$9.5 million). Three pension funds are the potential buyers, a source said.

As Argentine consumers start buying again, credit maturities are getting pushed out and rates are creeping down. "They were people buying mid last year, but they had to pay soaring rates and take on very short-term credit," said Eduardo D'Orazio, director of Fitch Ratings.

In the thick of the crisis, consumer loans extending beyond nine months were even more rare than hard currency on the streets of Buenos Aires. Credit is now readily available with terms of up to 1.5 years.

Copyright 2003 Thomson Media Inc. All Rights Reserved.

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