Take a look at Mexico's recent securitization history and you'll see a stream of RMBS but nary a CMBS. Sure, you might stumble on a freak deal from three years ago: a bond backed by mall leases and originated by GICSA. But then you'll notice it's no longer with us, bought back with a loan from GE Capital Bank in July 2005. And since then, nothing.

Whereas bankers have flocked to RMBS's expansive embrace they've stayed away from CMBS. If Mexican residential mortgages are The Queen of LatAm asset classes, the commercial side looks like Pan's Labyrinth.

"There's a lack of institutional management of properties and lease agreements aren't standardized," said Victor Gonzalez, a director at local brokerage IXE, citing two obstacles facing players.

Bankers are naturally going to avoid an asset class with a kaleidoscope of approaches in terms of contracts, management style and other traits. Leases in Mexico also tend to be quite short, making them poor candidates for securitization. And it's not like the mortgage market, where the political will (read: tireless support from government agencies) gave that extra incentive for players to build the conditions for a lush market to take root.

Through a mix of push-and-pull policies, the Mexican government gently nudged nonbank housing finance companies known as Sofols to start collateralizing. And the largest originator of Mexican mortgages, Infonavit, is government-owned. There's nothing analogous going on in CMBS.

Many commercial properties in Mexico are largely funded by wealthy families pooling their resources. While they might be amenable to securitization, they tend to run their businesses in ways that aren't amenable to industry-wide standardization.

But Gonzalez pooh-poohs the notion that everything has to be neatly in place for CMBS to start budding. IXE's got a deal in the works backed by a developer that Gonzalez characterized as "classic" and "middle-sized." Just the kind his rivals can replicate? "There must be 20 other commercial property developers capable of doing this," he said.

That might be so, but are there 20 other bankers up for a traipse into Pan's Labyrinth?

(c) 2007 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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