While eyes have been glued to Deutsche Bank in the race to take the first true MBS to Mexico's market (see ASR 1/27, p.21), local bank Banorte appears to have snuck ahead. Last week, Fitch Ratings confirmed a deal for up to Ps360 million (US$33 million) and carrying a tenor of no longer than 5.8 years. The national-scale rating is AAA(mex)'. Legal counsel is Irurita.

The structurer is Solida Administradora de Portafolios - part of the Banorte family - while the placement agent will be the bank's brokerage arm. Launch is timed for no later than May, according to a source on the deal. While Mexico's housing finance sector has thrived over the last several years, deals have been almost exclusively backed by bridge loans for construction and not mortgages per se.

Collateral for the Banorte deal is comprised of mortgages with tenors of up to 20 years, originated in the late 80s. Banca Serfin was the generator and sold the portfolio, known as Meseta, to Solida via an auction orchestrated by IPAB, a federal bank that handles banking insolvencies and other financial issues. Solida, in turn, plucked out the choicest mortgages from Meseta in order to garner a high rating for the MBS. "Obviously, not all of them met our criteria," said a source on the deal.

As of December 2002, the principal in the targeted pool was worth Ps1.5 billion and the number of mortgages totaled 10,157. "That creates a prudent margin of security," Fitch said in a press release. A full 95% of the credits boast a nonexistent to 90-day delinquency rate, while payments on 5% are late by between three months and 150 days.

The agency estimates that about 58% of the securitized mortgages will have matured by the end of bond's life. Some 83% of the pool is forecast to come due within six months of maturity, providing the deal with ample breathing room, according to Fitch.

Liquidity and reserve funds are additional buttresses propping up the transaction. Banorte will target retail investors, a source said. As a result, the deal will not carry the double rating needed to attract pension funds.

Geographically, the mortgages in the pool are fairly spread out. About 70% of the loans come from five subnational entities, three of which are Nueva Leon, Estado de Mexico and the Federal District, better known as Mexico City.

Copyright 2003 Thomson Media Inc. All Rights Reserved.

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