In the works since at least September, the Veracruz-Cardel securitization of future toll-road revenues hit the market Feb. 4. BBVA Bancomer was lead manager and Inbursa was co-lead. Amounting to Ps700 million (US$64 million), the deal's originator is the Veracruz-Cardel highway, which links the steamy Gulf port of Veracruz to the state capital of Jalapa. Rated mxAA+' by Standard & Poor's and AA+(mex)' by Fitch Ratings, the transaction yielded 7.95% over inflation-indexed UDIs. Judging by the last tollroad transaction, pricing was fair. Chihuahua issued a Ps1.1 billion (US$101 million) bond on Dec. 19 at 7.5% plus UDI, but that deal enjoyed higher ratings from Fitch of AAA(mex).'

Termed at 12 years, the Veracruz-Cardel bond is bolstered by a contingency fund that holds steady at 28 million UDIs (now about US$8.3 million) until maturity in November 2014. Further support comes from a maintenance fund worth Ps26 million (US$2.4 million). The coupon pays semi-annually. Proceeds are going to refinance short-term debt.

The Spanish bank appears to be busy on another Mexican front: waterworks. The market is percolating with talk of a Ps280 million (US$26 million) transaction for sewage-treatment company Ecosys, operating a concession in the city of Leon. BBVA is heard as issuer and Franck, Galicia, y Robles, as legal counsel. The structurer is understood to be Gulesserian Consultores, a financial consultancy that has a relationship with Ecosys.

Gulesserian crafted a deal in November 2001, securitizing concession payments by Ecosys plants operating in the state of Mexico. Sized at Ps297 million (US$27.1 million) and issued by Banorte, that deal priced at 10% over inflation-indexed UDIs. Moody's Investors Service rated it' on the national scale and Ba3 on the local currency, global scale. Gulesserian is expected to structure the latest deal along somewhat similar lines. If that is the case, it may be an easier sell than its predecessor. In a report on the original transaction, Moody's pointed out that risk was tied to the credit standing of the State of Mexico, which only recently has turned around its reputation as a basket case. (see cover story). The risk of the current deal would be tied to the company administering the water system of Leon, known as SAPAL. On the national scale, Fitch rates SAPAL AA-(mex)', a nice distance from the State of Mexico's BB+(mex)'. The deal would apparently securitize the concession fees from SAPAL to Ecocys. Operators Fypasa and Intensa are shareholders in Ecocys.

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