Sticking to structured deals because of a dodgy past as spendthrifts, Mexican sub-nationals are leaning on federal co-participation revenues to back local bonds. "All of the [subnational] deals are structured," said Laura Barrientos, senior analyst at Moody's Investors Service. "The Mexican market isn't ready for municipal or state bonds that aren't."

It's been a little over a year since local regulators gave the green light to states and municipalities to issue public debt. So far, federal revenues have been the backing asset of choice. The federal government distributes funds to the states, which in turn allocate at least 20% to their municipalities.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.