Several recent deals out of Mexico demonstrate once more the power of securitizations backed by hard currency, whether the deals parcel remittances or export receivables.

Bank of America Securities, for instance, recently closed an oversubscribed securitization of U.S. dollar cash flows generated by non-electronic remittances for Mexican bank Banorte.

The offering, which was increased from $250

million to $300 million, was Banorte's first securitization.

The deal was structured in two tranches: a $200 million piece wrapped by Asset Guaranty and a $100 million unwrapped chunk. The wrapped tranche had a seven-year final maturity, received a double-A rating from Standard and Poor's and priced at 150 bps over Libor. The uninsured tranche, had a five-year final maturity, a Baa1 rating from Moody's and priced at 325bp over Treasuries.

Though securitization of remittances by Mexican banks is not unusual, the oversubscribed deal was a significant achievement for Banorte, Mexico's third largest bank. "This transaction is a good source of U.S. dollars, and cheaper funding for Banorte," said a source familiar with the offering. "They were looking to do more dollar lending, and this deal will enable them to do so."

The transaction is the first check remittance securitization to achieve a seven-year term and to have one of its tranches insured, sources added.

Following suit was Banco Nacional de Mexico S.A. (Banamex), the banking unit of Mexico's top financial services company Grupo Financiero Banamex and the country's largest bank, which placed $200 million of three-year bonds backed by remittances from the U.S.

Westdeutsche Landesbank Girozentrale arranged the transaction, which consisted of two floaters: a $170 million senior piece and a $30 million subordinated chunk.

According to Banamex, the deal was oversubscribed by $35 million due to the positive sentiment towards the structure and the international strength of the bank.

With an annual flow of over $5 billion in funds sent by workers in the U.S. and Canada to their relatives in Mexico, remittances constitute one of the country's main sources of hard currency, surpassed only by the automotive and oil industries.

Which is where J. P. Morgan's securitized loan for auto parts manufacturer Nemak comes in. According to a J.P. Morgan official the $80 million transaction, backed by U.S. dollar export receivables from DaimlerChrysler, set a new benchmark for Latin American securitizations.

The deal features a five-year final maturity, a 3.8 year average life and priced at 212.5 bps over Libor.

"This is the tightest spread achieved by any Latin American company in a long time," said Antonio Villa, vice-president of structured finance at J. P. Morgan. "The reason for the success of the transaction is a combination of Nemak being a strong company (it is part of the Grupo Alpha, one of Mexico's largest conglomerates) and the fact that the transaction was backed by very strong receivables."

Not to be left out, Enertek, another Mexican auto parts manufacturer, also tapped the market with a $180 million five-year securitized loan arranged by Chase Securities, ING Bearings and Salomon Smith Barney.

Enertek's credit facility has a three-year grace period and is priced as 212.5 basis points over Libor for the first two years, 225 over for the third year, 237.5 over for the fourth year and 250 over for the fifth year.

The securitization is backed by export receivables from U.S. company Johnson Controls. "Enertek is a strong company and an attractive deal, but competing with Nemak is not easy," said a source familiar with the transaction. TH

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