The banking craze in Mexico for state and municipal debt may be dying down, and signs point to a revival in market issuance. The closing on Sept. 23 of a Ps3 billion ($221 million) bond backed by payroll taxes from the state of Chihuahua could usher in more bond deals from sub-sovereigns.

"We think that in the next 12 months we'll see various deals, but they won't be necessarily backed by payroll taxes," said Angel Cespedes, general director of Corporativo en Finanzas, which arranged the Chihuahua deal.

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