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Mexican '08 Wrap: Not So Grim

Mexico's domestic bond market stumbled during stretches of the year but still fared better than fixed income in many other countries.

Overall debt issuance dropped 22.1% in 2008 from 2007, according to local brokerage IXE.

At least one major category of structured finance actually registered growth, however. Future flow deals saw Ps23.0 billion ($1.6 billion) in issuance during the year, a 16% rise from the Ps19.8 billion posted in 2007, but still falling short of the Ps31.3 billion witnessed in 2006.

This category in Mexico includes transactions by states and municipalities as well as those from toll roads.

On the other hand, placements in asset-backed securities - a category that includes transactions backed by mortgages and construction bridge loans - shrank 9% to Ps44.3 billion from Ps40.3 billion in 2007.

However, amortizations of existing deals still paled in comparison to issuance levels, sending the volume of outstanding ABS paper past Ps100 billion for the first time to Ps115 billion at year-end.

Despite the gloom plaguing housing-related deals, RMBS and bridge loan deals accounted for 85% of the all outstanding asset-backed securities.

Maligned in the popular media across the globe last year, CDO issuance took a hit in Mexico, tallying up Ps8.1 billion, a 44% plunge from Ps14.4 billion in 2007.

Nevertheless, structures were generally straightforward in Mexico, which could have accounted for their continued activity.

IXE pointed out that the domestic pipeline already has a handful of securitizations in the queue.

Among them is a credit-backed deal from Ecosistema de Colima, a toll-road ABS from Agrupacion de Companias Constructoras de Veracruz and an RMBS from Hipotecaria Total.

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