Bear Stearns and Banco Hipotecario Price $180 Million of Mortgage Bonds, Series 2000-1 Issued by BHN IV Mortgage Trust; Largest Latin American MBS Transaction.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 16, 2000

Bear, Stearns & Co. Inc. announced today that it has launched and priced $180.4 million issue of Mortgage Bonds, Series 2000-1, issued by First Trust New York, Argentine permanent representation, on behalf of BHN IV Mortgage Trust. The bonds are backed by U.S. dollar-denominated mortgage loans and are secured by residential properties located in Argentina. Senior Mortgage Bonds of $156 million were placed by Bear Stearns with U.S., Argentine and international investors and Junior Mortgage Bonds of $24.375 million are being placed locally in Argentina by Banco Hipotecario.

The Class AF Bonds, a senior fixed rate tranche, was offered with a coupon of 8% per annum, at a price of 93.6875%, to yield 10.59% or 400 basis points over the 6.25% U.S. Treasury notes due February 2003. The Class AV Bonds, a senior floating rate tranche, were priced at par to yield 250 basis points more than the London interbank offered rate.

The residential mortgages backing the transaction were originated by Banco Hipotecario S.A., or through its third party banking network. Banco Hipotecario is the largest mortgage lender, servicer and insurer in Argentina, writing nearly one third of the residential mortgages originated in Argentina, with a servicing portfolio exceeding 400,000 loans. Banco Hipotecario will also serve as master servicer for the mortgage loans and this transaction.

BHN IV Mortgage Trust is the fourth mortgage securitization transaction issued by Banco Hipotecario, and this is their first MBS transaction since 1997. Banco Hipotecario has strong capital (equity to assets ratio of 45%) and has been a frequent issuer in the capital markets. The Argentine government, which sold a partial stake in early 1999, currently owns 49% of Banco Hipotecario. At present, BHN's major shareholders, besides the Argentine government, include the Soros group and the Local Pension Funds with management in private hands. The current ratings of Banco Hipotecario are B1/BB-.

Besides being the largest Latin American mortgage securitization to date, this is a groundbreaking transaction because it is the first structured MBS transaction to utilize political risk insurance, which allows the transaction to pierce the sovereign ceiling. This insurance is provided by Steadfast Insurance Company, a wholly-owned subsidiary of Zurich American Insurance Company, that provides offshore funds to pay interest to the bondholders for at least 31 months during the occurrence of an inconvertibility event. Credit support for the senior securities is provided by subordination of 20%, excess spread and limited expense and interest reserve funds.

Moody's is expected to assign an "A1" rating to the senior bonds, which is the highest rating that can be assigned to a cross-border bond supported by Argentine assets, while Fitch IBCA is expected to rate the transaction "A+". These ratings are the highest ever assigned to a Latin American mortgage-backed security. These ratings are 9 notches above the sovereign ceiling for Moody's and 7 notches for Fitch IBCA. The structure of the transaction and the investment grade ratings assigned permitted the Senior Mortgage Bonds, at their original launch, to price significantly through the argentine sovereign curve.

Bear, Stearns & Co. Inc., which served as sole placement agent for the Senior Mortgage Bonds, pursuant to a Rule 144A/Regulation S private placement, upsized the amount of the transaction from an original launch level of $100 million to the final issuance amount of $156 million. The decision was in response to strong interest from U.S. and international investors.

Recently, Banco Hipotecario, IRSA and the International Finance Corporation (IFC) of the World Bank have decided to create a secondary mortgage bank in Argentina. The new bank's goal is the creation and development of a secondary mortgage market in Argentina providing market players with access to financial resources at suitable terms and rates for the growth of the primary mortgage market. It is expected that upon approval of this new bank by the Central Bank of Argentina, Banco Hipotecario and other mortgage originators will utilize this new entity to issue MBS securitizations.

Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. (NYSE:BSC). With approximately $23.2 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales and trading, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers professional and correspondent clearing, including securities lending. Headquartered in New York City, the company has more than 10,200 employees located in domestic offices in Atlanta, Boston, Chicago, Dallas, Los Angeles, San Francisco and San Juan; and an international presence in Beijing, Buenos Aires, Dublin, Hong Kong, London, Lugano, Sao Paulo, Shanghai, Singapore and Tokyo. For additional information about Bear Stearns, please visit our Web site at http://www.bearstearns.com.