News
Banc of America Securities was readying a $100 million commercial trade receivables term deal for Food Services of America, a subsidiary of Services Group of America. The receivables are generated by three of SGA subsidiaries, which provide food-related products to commercial, industrial and government facilities.
The Office of Federal Housing Enterprise Oversight (OFHEO) has finalized a capital proposal on counterparty risk that has narrowed the advantage that triple-A rated mortgage insurance companies would have over their double-A rated competitors. Under the final revision, Fannie Mae and Freddie Mac have to hold more than twice as much capital if they purchase loans with mortgage insurance backed by a double-A rated vendor compared to a triple-A rated vendor. However, the final amendment sets the counterparty capital requirement at 3.5% for triple-A rated mortgage insurance companies and 8.75% for double-A rated companies, which is significantly reduced from the original risk-based rule issued in September 2001. OFHEO also decided to stretch out the phase-in period for counterparty risk from five to 10 years.
Ratings
Standard & Poor's has placed PDVSA Ltd, a wholly owned subsidiary of Petrleos de Venezuela SA (PDVSA), on CreditWatch with negative implications. This ratings watch follows the same rating changes recently made to PDVSA's owner the Bolivarian Republic of Venezuela. The CreditWatch placement will affect $3.6 billion of U.S. dollar-denominated notes and $200 million in euro-denominated notes. The future of the current rating is dependent upon changes in the level of sovereign risk and the extent to which the structure mitigates such sovereign risk. While a sovereign downgrade would not trigger an automatic downgrade of PDVSA Finance, the level of political control and influence of PDVSA by the government, as most recently evidenced by the appointment by the government of PDVSA's fourth president in three years, makes such an action likely, said S&P.
Standard & Poor's has lowered its rating on Aguas Argentinas SA's $140 million fixed-rate IADB B loan to CC' from CCC-'. The rating downgrade follows the recent downgrade of the local currency rating of the underlying obligor for this transaction, Argentina's largest water utility, Aguas Argentinas S.A. (Aguas), to selective default from CCC-' The foreign currency rating of Aguas remains at selective default.
CDOs
Bear Stearns is pre-marketing the Falcon Asset-Backed CDO I, a Euro 300 million structured finance CDO for Gulf Bank International, at 45 basis points area over Euribor (A/L 6.8-years), according to investors.
The deal is Europe's first SF CDO with underlying cash securities. Investors are hearing of a substantial pipeline of European cashflow IG ABS CDOs.
Commerzbank's N.Y.-based CDO team has quietly been doing a decent flow of business, leading at least three synthetic IG CDOs since the team was established in early 2001. The team, led by head of structured credit in New York, Peter Tchir, has a U.S. arbitrage cashflow leveraged-loan backed CDO in the pipeline for the first half. Also on the team are Joe Carroll and Vitaly Fiks.
Miscellaneous
National Economic Research Associates (NERA), which was contracted by Moody's Investors Service to conduct a cross-agency transition study, released its plan for commentary last week. All three rating agencies and the Bond Market Association are among the market participants solicited for comments. NERA is also asking for data and any existing transition-related studies that might be helpful in its undertaking. Contact NERA at 212-345-3000.
Calendar
March 24-25: Las Vegas, Nevada - Banc of America Securities will host the fourth annual ABS and MBS investor/issuer forum. For more information contact Covell Day at (704) 388-7835 or gmgevents@bankofamerica.com.
April 7-10: Orlando, Florida Standard and Poor's will host the 17th annual Structured Finance Seminar. For more information call 212-438-2800 or visit http://www.standardandpoors.com/
Events/Articles/pdf/PostcardforEBLAST.pdf
May 14-15: Royal Park, Tokyo Japanese Securitization will be hosted by the Information Management Network. For more information, visit www.imn.org.
June 2-4: New York, New York Standard and Poor's will host the 2002 Insurance Seminar for insurance industry professionals and investors. In support of the revitalization of New York, the conference will be held at the Grand Hyatt New York. For more information call 212-438-2800.
June 17-19: Barcelona, Spain Information Management Network will host the sixth annual Global Asset Securitization. For detailed information visit www.imn.org.
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