Bracing a weak Mexican bank system, Mexican bank Banorte was on roadshows last week with a $250 million securitization of U.S. dollar cash flows generated by non-electronic remittances. NationsBank is the lead manager and expects to close the deal by the end of June. The remittances will be transferred to Banco Mercantil del Norte, Banco del Centro and Banpais, all of which belong to the Banorte financial group. The assets include money orders, traveller's and personal checks drawn on U.S. financial institutions, checks issued by U.S. governmental agencies and U.S. postal orders.

The offering is structured in two tranches: a $150 million wrapped piece rated double-A by Standard and Poor's and triple-A by Duff and Phelps and a $100 million unwrapped chunk rated Baa1 by Moody's. The notes in the $150 million tranche carry a seven-year final maturity and a four-year average life, while the notes in the $100 million tranche have a five-year final maturity and a 3.2 average life.

"Banorte is not the largest Mexican bank," said Moody's analyst Diana Weaver. "Yet it is one of the strongest financial institutions within the Mexican banking system." Financial strength is a key factor given the fact that, on average, the Mexican banking system has among the lowest bank financial strength rating of any country in Latin America.

Banorte was privatized in 1992 and was among

the least affected by the banking crisis of 1994. According to Moody's, it is the domestic bank most likely to remain profitable in both stable and volatile economic periods.

"It seems to be a good deal", said an investor who said she hoped to see more export securitization type transactions out of Mexico in the future. "I think there are some good values to be found in Mexico. However, I believe that the weakness of their banking system is still a concern for many investors." - TH

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