Morgan & Morgan provided legal counsel to La Hipotecaria, S.A. regarding cross-border securitization of mortgage loans and public offering of mortgage bonds for up to US$12,500,000.00
La Hipotecaria, S.A. as trustee of the Ninth Trust of Mortgage Loan Bonds, registered mortgage loans bonds for an amount of up to US$12,500,000.00 before the National Securities Commission of the Republic of Panama, which have also been successfully placed through Panama’s Stock Exchange. Payments due to holders of said bonds are secured by a guarantee trust constituted under the laws of the Republic of Panama and composed mostly of mortgage loans granted to debtors in El Salvador by La Hipotecaria, S.A. de C.V., an affiliate of La Hipotecaria, S.A., that grants loans in El Salvador.
This is a cross-border securitization because the mortgage loans were assigned by La Hipotecaria, S.A. de C.V., a company incorporated under the laws of the Republic of El Salvador, to a guarantee trust constituted under the laws of the Republic of Panama and whose trustee is BG Trust, Inc., an affiliate of Banco General that has been duly authorized by the Superintendency of Banks to carry out the trust business in Panama. For this purpose, lawyers from Morgan & Morgan cooperated with the law firm Rusconi & Valdez, legal counsel of La Hipotecaria, S.A. de C.V. in El Salvador, more particularly on legal issues relating to the assignment of the mortgage loans, notification to debtors, and filings at the corresponding Property and Mortgage Registers of the Republic of El Salvador.
The Series A Bonds offered publicly to investors as a result of this transaction were granted a AAA rating by risk rating companies with a long trajectory and excellent reputation.
Morgan & Morgan represented La Hipotecaria, S.A. in this important transaction. Francisco Arias G, partner of the firm, and Ricardo Arias, associate, participated in the transaction.
On February 14, 2006, global power company AES issued US$300 million worth of bonds in the international market, guaranteed by four electricity distribution companies it controls in El Salvador. This issuance was the first by a private company to be guaranteed in this way originating from Central America. It was also the first investment grade issue by a private company in Central America.
The issuance, placed in the international markets under Rule 144A and Regulation S, was underwritten by Credit Suisse First Boston.
For this transaction, Morgan & Morgan acted as counsel for the trustee and Panamanian counsel for AES El Salvador, thus confirming its presence in regional transactions of the highest order. Partners Inocencio Galindo, Rómulo Roux and Raúl Castro, as well as associate Ramón Varela, were the key participants for Morgan & Morgan.