Mexican CMBS, the poor cousin to RMBS, is finally having a few pesos thrown its way. By some accounts, the second-ever CMBS in the domestic market is coming.
Led by IXE, the deal amounts to 275 million inflation-indexed units (UDIs) ($94 million), with a 15-year legal final. Collateral consists of rental leases from stores belonging to five commercial centers located in different states and owned by holding company Grupo Acosta Verde. Standard & Poor's has rated the deal mxAA+', but the originator hasn't yet settled on whether Fitch Ratings, Moody's Investors Service, or both would supply ratings, said a source close to the transaction.
The rental leases are secured by the properties themselves. The contracts run from one to 10 years, depending on the type of locale. As such, the transaction has a revolving component. The leases are in pesos, but are readjusted annually with inflation in mind, which roughly brings them into sync with the rhythm of the UDI, the denomination of the CMBS.
The anchor store for all the centers is Soriana, a leading retailer not unlike Wal-Mart. Most of Soriana's customers are working class. According to Wikipedia, in the late '70s the retailer's slogan was "Where all days are good days."
Also up ahead is a CDO of Mexican domestic RMBS, pulled together by Deutsche (ASR, 2/19/07). An updated prospectus lists three series, all with triple-A ratings on the national scale. The makeup of the collateral has altered since the first preliminary prospectus came out, although the number of mortgage securities, five, remains the same. RMBS from GMAC and Comercial America were replaced with paper from Metrofinanciera and Su Casita.
The third series of the CDO is especially vulnerable to a speedy amortization of the underlying collateral, according to the prospectus. In addition, two of the bonds, originated by Fincasa and Credito y Casa, can be reopened, an event that would dilute the relative weight of the CDO's trustee, ABN Amro, among bondholders. The CDO program is capped at Ps11 billion ($987 million), but the planned size of the initial issue remained unclear as of press time.
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