Banco Velox S.A. and Banco Privado de Inversiones S.A., two Argentinean issuers seeking to benefit from improved sentiment towards the country after the October presidential elections, launched securitizations last week.

Banco Velox's $13 million loan securitization came first, via an SPV called Fideicomiso Financiero Credicuotas Serie 2. The transaction was managed by Deutsche Bank S.A. and will receive a national scale rating from Standard & Poor's Ratings Services.

The notes are backed by unsecured personal loans made directly by the bank and loans issued via labor unions, for which repayments come automatically from borrowers' pay checks.

A source who has worked on the deal said that both kinds of loans present their own problems: "Payment to union workers comes from the government, which is sometimes late in paying its employees, and this could adversely affect interest payments on some of the loans. As for personal loans, they are mostly granted to low-income individuals, which implies a high risk of default."

This is Banco Velox's second securitization, after an equally sized deal launched early this year was well received by both private and institutional investors. "The bank is looking for a 12% coupon and is seeking mostly institutional investors," said Juan Pablo de Mollein, analyst at S&P in Argentina.

Banco Privado de Inversiones, meanwhile, chose to tap the local market with a $15 million securitization of deferred checks. The deal is Banco Privado's first ABS and was managed by ABN Amro Bank N.V. S&P will also rate this transaction on the national scale.

The deal's revolving structure allows the checks, which bear a six-month maturity, to be constantly replaced. "The bank decided to go out with a short-term instrument for its first securitization," explained Mollein. "If their product is well received by the market, they will extend the maturity of the checks."

So far the market has been responsive. "We received many calls from local pension funds regarding both transactions," said Mollein. "These type of products held a sizable market share until 1997, when demand slowed down. Now we are seeing a comeback."

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