HSBC Trust Project The project will be a two-stage effort to support expansion of an Export Securitization Program (the program) organized by a consortium of Argentine banks. The banks are led by HSBC Bank Argentina S.A. (HSBC), BBVA Banco Frances S.A. (BBVA) and Banco Rio de La Plata S.A. (BRLP and together they are called the Arrangers). The program provides pre-shipment export financing to Argentine corporates.   The two stages of the program will be structured through Financial Trusts incorporated in Argentina under Law 24.441 (the Trust), to be created by HSBC, BBVA and BRLP as Arrangers and Trustors. The Trusts will acquire predetermined USD-denominated, pre-shipment export loans originated by the Arrangers, and will fund this origination activity by issuing USD-denominated short-term debt notes (the Notes or the Securities). The Notes will be issued under the Argentine public offering regime and will be registered with the Comision Nacional de Valores (CNV).  Preliminarily, domestic pension funds (AFJPs) will be targeted as investors for the Notes.     In the short-term, the project is expected to support further expansion of the program, in order to make it more widely available for Argentine exporters.  This may catalyze a significant mobilization of funding from pension funds, which are currently quite liquid, to the cash-strapped export sector. Given the current state of the Argentine banking sector  which has traditionally funded trade finance activity in the country  such a mobilization is essential in order to provide needed funding to Argentine exporters.  A medium-term objective of the project (and the program) is to attract international investors to an asset class with a relatively attractive commercial structure, but where perceived Argentine country risk is mitigated.   The project will have two stages.  In a first stage, IFC would support the execution of an up to $40 million financing under the program (EXPO II), by providing a stand-by purchase commitment to the Arrangers for up to $10 million.  This purchase commitment can be accessed -- at the Arrangers'' sole discretion -- in order to cover an under-subscription or achieve an over-subscription of Notes to be issued.  IFCs participation in the first stage of the program would be instrumental to replicate the success of the initial EXPO transaction, given that:   -  EXPO II is larger than EXPO I,    -  domestic pension funds are still not well acquainted with the program, and    -  EXPO II will securitize assets from a larger group of exporters.   In a second stage, a larger transaction (EXPO III) including around 30 smaller exporters is planned. As a result of the more diverse credit profile of this second group of exporters and nature of assets underlying a proposed securitization undertaken on their behalf, it is expected that credit rating agencies will require a junior/subordinated tranche in Notes issued by the Trust for EXPO III, and that a two-tier funding structure is therefore necessary in order for the Notes to achieve a credit rating compatible with pension funds investment guidelines.  In this second stage of the project, IFCs investment participation in EXPO III would entail subscription of up to a $5 million portion of a junior Notes tranche to be issued by the Trust, as well as a stand-by purchase commitment to the transactions Trust for up to $5 million.