MOODY'S LATIN AMERICA ASSIGNS PROVISIONAL RATING OF A1.ar TO NIDEXPORT I
Approximately $20.0 Million of Debt Securities Affected.
Buenos Aires, May 06, 2004 -- Moody's Latin America has assigned a provisional national scale rating
of A1.ar to the Valores Representativos de Deuda -Class
A Fix Rate Securities- (VRD) to be issued by ING Bank N.V.
Sucursal Argentina (acting solely in his capacity as Issuer and Trustee).
VRDs will be backed by future flows of exports between Nidera S.A.
-rated A1.ar in the national scale- and Nidera Handelscompagnie
BV (NHBV). In addition, Nidera S.A. provides
a guarantee to cover any shortfall in the Peso account.
According to Moody's, the A1.ar rating is based on the following
factors: 1) the ability and willingness of Nidera S.A.
to make payments to investors in a local currency basis under the guarantee
2) the ability of ING Bank N.V. Sucursal Argentina to act
as trustee for the benefit of bondholders 3) the structural and legal
features of the transaction.
Nidera S.A. is an agribusiness company based in Argentina
specialized in production and trading of grains, vegetable oils,
fertilizers, agrochemicals and seeds. NHBV is a trading company
based in Netherlands created in 1920. Both companies operate at
arm´s length and form part of the same holding.
There are several operational, merchandise and credit risks related
to export cash flows that are mitigated by a guarantee provided by Nidera
S.A. Therefore, Moody's is not basing its analysis
on the risks related to the export receivables, but focusing on
the guarantee provided by Nidera S.A. as explained further
in this press release.
Up to 20 Million Dollars on Fix Rate Securities -Fideicomiso Financiero
Nidexport I- Class A rated A1.ar.
ING Bank Sucursal Argentina will issue one class of debt securities and
a residual piece (not rated), all denominated in US dollars but
payable in pesos from export cash flows received from NHVB or the guarantee
extended by Nidera S.A. VRDs will bear an annual fixed interest
Investors are promised timely quarterly interest payment and principal
payment at the legal final. In both cases the rating on the transaction
is based on the expected payment date (EPD) plus a 10-day grace
period -payment date (PD).
Investors are promised the Peso equivalent of the USD amounts owed using
the EMTA ARS Industry Survey Rate exchange rate from two days prior to
either the EPD payment date or the PD. If the Central Bank establishes
a two tier exchange rate and the official rate is applicable to grain
exports, then VRDs will be paid -at investor's option-
using this exchange rate as a reference, as explained in the following
Ultimate legal final is 3 years and 10 days after closing. However,
if there is a two tier exchange rate event, defined as a difference
greater than 5% between the free market exchange rate and the official
exchange rate for exports, then investors will have the ability
to defer payments of interest and/or principal deciding on a bondholders
Interest payment can be deferred for one quarter and will be annually
converted into principal. Each quarter, investors have to
vote again to decide between deferring interest payments or receiving
the scheduled payment at the official exchange rate for exports.
Principal payment can be deferred for six months. Each semester
investors have to vote again to decide between deferments of principal
or to receive the scheduled payment at the exchange rate for exports.
Principal payment can be deferred to a maximum of 8 years and 10 days
after closing date.
In both cases, Nidera S.A. has the obligation to continue
performing its duties under the transaction documents.
If the two tier exchange rate event occurs on the date that makes impossible
to call for a bondholders meeting, then interest payment will be
automatically differed for one quarter and principal will be automatically
differed for one semester. If that is the case, investors
will have to vote within the month after the expected payment to approve
the deferment or to receive the amounts due. If they vote to receive
the amount, payment will be done 10 days after the decision at the
export exchange rate of 8 days after the decision.
This means that investors are taking the risk that the difference between
the free market exchange rate and the official exchange rate for exports
is greater at the payment date after bondholders decision than at the
EPD. If investors decide to receive the scheduled payment at the
exchange rate for exports, can suffer a loss when compared to amounts
due on the EPD. This risk is disclosed in transaction documents.
Moreover, the voting process works as follows: at least 60%
of the senior bondholders decide if they want the extension or not.
Bondholders meeting majority decision applies to all bondholders alike
-participating or not in the meeting- and including those
who voted against the motion. The decision takes place only after
published in the Buenos Aires Stock Exchange Gazette.
Nidera's guarantee also applies in case of two tier exchange rate events
or deferment of payments.
In this transaction, there is a last resource guarantee provided
by Nidera S.A. that covers any shortfall related to the
cash deposited in the Peso account only related to debt service.
The language in the documents covers any operational, merchandise,
importer risk that happened either because of credit, omission,
or error problems, among others.
The risks that Nidera S.A. is not covering are: fraud
related to the trustee (expropriation of funds) or confiscation of the
monies deposited in the trust account by the government of Argentina.
The trustee risk is mitigated by the fact that ING N.V.
Sucursal Argentina is the designated trustee in the transaction.
Although the Argentine branch of ING is not rated by Moody's, it
is a full branch of ING Bank N.V. (rated Aa2 for Bank Deposits).
The government risk is mitigated because the rating on the transaction
is lower than the maximum rating an Argentine issuer can obtain.
Two business days before the EPD, the trustee will be obligated
to verify if available funds in the Peso account are sufficient to cover
the debt service. In case of shortfall, the trustee is obligated
through certified letter to notify Nidera S.A. about the
shortfall in one business day.
Any USD shortfalls between the Peso amounts available and the Dollar debt
service will be paid on the 10th day after the EPD using the Export Exchange
Rate of the 8th day after the EPD. Investors are also promised
interest for the remedy period. This is a bullet transaction;
therefore interest payments will always be calculated over the original
amount, with the exception of payments on the legal final when Peso
amounts on the 2nd day before EPD will be paid to investors reducing the
outstanding balance on the securities. Therefore, interest
will be calculated over the outstanding balance. Taxes and expenses
of the Trust will be also covered by Nidera S.A.
Details of Moody's analysis can be found in the forthcoming Fideicomiso
Financiero Nidexport Serie I Pre Sale report.
Structured Finance Group
Moody's Investors Service
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service