Celebrating a revolution that erupted in 1910, Mexicans have just come off a four-day weekend. This typically heralds the start of the end-of-year holiday season and market players either put off deals until next year or rev up their roadshows to squeeze in transactions before the Virgin of Guadalupe (Dec. 12) and Christmas steal the show.

With the pipeline bulking up, the latter might hold true for a few players.

Casa de Bolsa Santander Serfin, for one, is not yet taking it easy. The Spanish bank has recently registered three new deals with Mexican regulators and at least two are heard pricing by the end of the year. This would not be out of character for Santander. Just days ahead of Christmas 2002, the firm issued a risky transaction for the then-unloved State of Mexico.

Among the novelties in Santander's bag is a property lease deal for leading Mexican real estate firm GICSA, seen coming before the end of the year. Sized at Ps620 million (US$55 million), the bond securitizes leasing receivables from three shopping centers: Punta Langosta in Cozumel, Las Plazas Outlet Lerma in the State of Mexico and Centro Comercial Forum in Culiacan in the state of Sinaloa. The legal final maturity is seven years and the bond is a floater, to price over Cete treasuries. While Santander is the placement agent, financial consultancy Corporativo en Finanzas is the structurer.

GICSA pulled in roughly US$40 million of revenue in 2001. Funds from the deal will go to refinancing debt used to bankroll the property purchases and construction costs related to the three consumer hubs. Excess proceeds will be plowed into new real estate projects.

Rival bankers question the suitability of the transaction with rates as stable as they have been. "When there's a lot of volatility, this would be a cost-efficient solution," said one Mexico City-based source. "But with rates this low and stable, I'm not so sure." Santander officials could not be reached for comment.

Aguascalientes bubbles up

The Spanish bank is bringing a sub-sovereign client to the market as well. The municipality of Aguascalientes is looking to tap investors for Ps100 million (US$8.9 million) in its second issue backed by federal co-participation revenues. Standard & Poor's and Moody's Investors Service have rated the five-year deal mxAAA' and Aaa.mx', on the national scale, respectively.

On a stand-alone basis, the municipality has a Aa2.mx' national scale rating from Moody's. "It's had stable finance for quite a long time," said Laura Barrientos, senior credit officer at the rating agency.

This deal would take total issuance to Ps190 million. The first bond, placed in December 2001, matures in a single bullet payment in 2006, but the total outstanding could be considered half the Ps90 million, given that principal payments have been accumulating in the trust, according to Barrientos. The covenants of the deal allow the municipality to issue an additional Ps50 million, but the current administration of Aguascalientes has indicated that it will not pay another visit to the market before its term ends in a year. The bond covenants limit to 50% the total volume of participation revenue the state can pledge. Copas, as this asset class is known, are disbursements that the federal government makes to the sub-sovereigns. In many states, they represent 90% of all income.

Proceeds are going to a variety of public works projects, including the expansion of a major thoroughfare. Legal counsel on the transaction is White & Case. Situated in Central Mexico, Aguascalientes is the capital of an eponymous state. They're both named after hot springs that lie beneath their territory.

Finally, Santander has teamed up with domestic player Banorte Casa de Bolsa, to jointly lead a Ps500 million (US$43 million) deal for housing finance company Hipotecario Nacional. This marks the second deal under a program securitizing bridge loans for construction. The legal final maturity is seven years. Deutsche Bank led the prior deal. The current transaction appears to have an identical structure, tiered between an A tranche worth Ps420 million (US$38 million), a B mezzanine tranche at Ps60 million (US$5.4 million) and an equity piece for Ps20 million (US$1.8 million).

The senior piece of the last deal was rated triple-A on the national scale by S&P and Fitch Ratings. The mezzanine tranche was single-A.

While Santander is clearly busy, other banks might circle deals before year-end. Credit Suisse First Boston is expected to issue the country's first RMBS in December. And, after months of paralysis induced by regulators, the prospectus of a CLO for the Federal District has finally popped up on the Web site of Mexico's Securities Exchange. Led by Acciones y Valores, an arm of Citigroup, the transaction securitizes a loan the underwriter will extend to the FD, which is the country's economic epicenter. The program is sized at Ps5 billion (US$447 million), but the first issue is expected to be closer to half that.

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