Having become a fixture in the Brazilian cross-border pipeline since late last year, credit-card deal Visanet appears to have broken loose. Lead arranger Merrill Lynch went on roadshow last week with a private placement for the company, according to sources. The size of the initial deal is heard at US$300 million, though the potential volume of a program is US$500 million.

Visanet is the exclusive processor of Visa credit and debit card vouchers in Brazil. Its shareholders are Banco ABN Amro Real (14%), Visa International (10%), Banco do Brasil (32%), Banco Bradesco (39%) and others (5%).

ABN Amro and Visa International are not participating in the current deal. "They pulled out towards the end," said a source familiar with the transaction. "Visa International was not in need of the proceeds." Speculation was that the head office of ABN preferred to stay out of the deal because of sufficient exposure to Brazilian "headline risk."

Nevertheless, sources said both Visa International and ABN have conferred their blessing on the transaction, and Banco do Brasil and Bradesco are supporting certain obligations in the deal. "They're strong credits and I've heard the deal is getting a nice reception," said a banker away from the transaction.

In addition, the fact that ABN and Visa International are staying out has no impact on the generation receivables or their transfer to the issuing trust, sources said.

Rating agencies do not seem bothered by the pullout. Moody's Investors Service, Standard & Poor's and Fitch Ratings have given the paper preliminary ratings of Baa1'/'BBB+'/'BBB+', respectively. As such, the deal pierces the sovereign ceiling at all the agencies, with the structure mitigating sovereign risk.

Clifford Chance is counsel for the issuer and Dewey Ballantine is advising Merrill. Brazilian firm Pinheiro Neto is deal counsel for those aspects of the transaction governed by domestic law. The transaction is a 144A without registration rights, a source said.

The Visanet transaction is the first credit-card deal out of Latin America originated by a non-bank entity. Visa International and the shareholder banks created the company in 1995 to centralize the processing and marketing of Visa in the country. "So far it has been really successful and Visa likes the exclusivity," a source said. The company has paid out dividends of roughly US$130 million over the past three years. The model has been replicated in Peru and Uruguay.

Brazil's Redecard is no doubt watching its rival with interest. The processor of Mastercard vouchers is also in the pipeline with a deal, though it is not as far along. Citigroup is heard with the mandate. Unibanco, Banco Itau and Citibank are the shareholders of Redecard.


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