Bounding onto the Latin American playing field, Wachovia Securities has won a mandate from El Salvador's Banco Agricola for a deal backed by diversified payment rights (DPRs), according to sources. One of the pillar asset classes supporting the cross-border market, DPRs refer to electronic money transfers for flows such as worker remittances and payments linked to trade and foreign investment. The bankers building the transaction hopped over from Banc of America Securities after the latter bank withdrew from the Southern Cone and narrowed its focus in other parts of the region, according to sources.
Leading the effort is Jerome Festa, who was a managing director and head of Latin American securitization at BofA, according to a source. In a mid-summer press release, Wachovia announced that Festa, along with Nicole Mallette Freeman and Kristy Cannaday, were hired to form a new International Future Flow Group.
Though Wachovia is a rookie in arranging DPR deals, it is a leading processor of payments headed to Latin American banks and has participated in the asset class as a foreign correspondent bank. "If you look at the processing banks in these deals, you'll see Wachovia's there a lot," said a source familiar with the sector.
In other cross-border news, the market is still catching its breath from the issuer rush that ran from June through August. Nothing appears to be imminent in the strict ABS market, although Brazilian beverage company Companhia Brasileira de Bebidas (CBB) has a quasi-structured US$300 million deal in the works, led by Citigroup. "It's not a real ABS, but the circle of investors will probably be the same ones who go for future flows," said a banker away from the deal. The deal is a straight corporate except for a political risk insurance (PRI) policy provided by Zurich American Insurance unit Steadfast. PRI helps mitigate sovereign risk and convertibility risk but is not akin to a full wrap. Fitch Ratings and Standard & Poor's have rated the transaction BBB-.' The maturity is 10 years. CBB is a unit of Companhia de Bebidas das Americas (AmBev).
Meanwhile, another unit of the Zurich family, Centre Solutions, is getting less welcome attention from players. Fitch Ratings has downgraded Centre's wrap to A-' from A.' That knocks down the ratings of two Latin American deals in the airline sector: AeroMexico Receivables US Trust and Pelican Series 1999-I (Lan Chile). The Mexican and Chilean transactions were originally US$65 million and US$60 million, respectively. Merrill Lynch was the arranger. A source familiar with the deals said that about half of each has already paid down.