A brisk securitization business in Mexico continues to beckon players from abroad, with monoline insurers, arrangers and even hedge fund investors unable to resist. Entrenched originators are spreading their roots further, while there always seems to be a debut issuer or collateral just around the corner. Some of the energy might be coming from elections - originators are pressed to get in before the ballot - but no one thinks the political environment will do much more than pause activity.
So far this year, ASR has tracked roughly Ps12.9 billion ($1.2 billion) in local volume, parceled out among nine originators. The pipeline looks healthy too. Originators well versed in securitization, such as mortgage originators Credito y Casa and Metrofinanciera are prepping deals, but players can also expect an infusion of new blood.
Market maiden Comercial America, for instance, plans to collateralize its mortgages, entering an arena that has become one of the main attractions for foreign securitization players. The Sofol, as nonbank housing finance companies are known in Mexico, has registered a Ps2 billion program with Mexican regulators, with the initial issue expected to be in inflation indexed units (UDIs), the most common denomination for mortgages and hence, for RMBS. ING, which also controls Comercial, is handling the deal through its brokerage unit. The bond is in the preliminary stages, with transaction details yet to be sorted out. Comercial has one of the lowest delinquency rates among Sofols, according to a source close to the deal.
Another newcomer is the Instituto de Control Vehicular del Estado de Nuevo Leon (I.C.V.) an agency of the Nuevo Leon state government - in the northeast of Mexico - that oversees a charge for registering a vehicle and for annually renewing that registration, in the northeast of Mexico. The deal is capped at Ps2.7 billion - from an overall shelf of Ps9.4 billion - and will have a legal final of about 30 years. Banorte is the sole lead. The I.C.V. pulled in Ps780 million from the registration charge in 2005, up from Ps525 million in 2004 and Ps314 million in 2000. Fitch Ratings and Standard & Poor's have rated the deal AAA(mex)' and mxAA+', respectively.
The word in the market is that I.C.V. had been in talks with MBIA to wrap the deal, but that the insurer got cold feet when the specter of political friction reared its head, according to a source familiar with the deal. Nuevo Leon's political opposition has been fired up over debt issuance by the state and state entities, even when the funding has been off balance sheet, another source said, adding that the grumbling didn't amount to much given that the next elections for governor aren't for another three years. The state has already tapped the market with deals backed by payroll taxes and toll road revenues.
Also down the pike is a small ABS collateralizing revenue generated along a toll road in the city of Acapulco, Guerrero State. How far down the pike is an open question, as one source familiar with the deal said it has been stalled for months, with changes in the concession contract having lead to repeated delays. Grupo Mexicano de Desarrollo is the concessionaire and Arka is the sole placement agent. Denominated in UDIs, the deal will probably be sized in the ballpark of Ps225 million, with a 15-year maturity, the source said.
The concessioned road provides access to a hotel strip in Acapulco known as the "Diamond Tip." Proceeds will go to pay down a loan owed to state owned bank Banobras.
Elsewhere in the market, an ABS is in the works for Arrendadora Unifin, a company that provides auto leases, an asset class that has yet to be collateralized in Mexico. The originator has registered a Ps1 billion shelf with regulators. From the end of 2001 to September 2005, Unifin's lease portfolio ballooned by an average annual growth of 44.6%, according to a servicer report by S&P. The number of leases totaled 1,251 in September 2005.
Meanwhile, two more seasoned ABS issuers - all Sofols - aren't letting the newcomers crowd them out. Metrofinanciera is aiming to place a Ps500 million deal in UDIs backed by residential mortgages, according to a source close to the deal. The maturity is planned at 27.7 years. The deal might feature a guaranty from federal agency Sociedad Hipotecaria Federal. The number of loans in the underlying pool totals 1,365 and the average weighted yield is 10.54%. The deal will be the fourth under the Sofol's current program, bringing issuance to Ps2 billion from a cap of Ps5 billion. IXE is the sole lead.
The arranger is also busy with Credito y Casa, which has an RMBS currently in the structuring phase. The deal, which might reach Ps600 million, will launch a shelf for Ps3 billion.
The most recent issuers to tap investors in Mexico's bustling market are Banco del Bajio and Spira. The former collateralized nine loans to subsovereign borrowers and state companies in a Ps4.4 billion deal, with a tenor of 15 years. "It served to clean up their balance sheet," said one source close to the transaction, adding that Banco del Bajio had too much public credit risk. Rated triple-A on the respective national scales of S&P and Fitch, the deal priced at 20 basis points over 28-day TIIE. Invex was the placement agent, while Monex was the structurer.
Spira, meanwhile, securitized a pool of 8,000 credit card users via sole lead Invex. With a short maturity of 1.5 years, the Ps250 million transaction priced at 290 basis points over 28-day TIIE. Fitch rated the deal BBB+' on its national scale. The transaction is the second off a Ps2 billion program, bringing the total issued to Ps400 million. There could be more later this year, said a source close to Spira.
(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.