Banks in Mexico are no longer ceding the RMBS arena to nonbank real estate companies known as Sofols. Banco Mercantil del Norte (Banorte) recently registered a Ps10 billion ($925 million) RMBS program, which is being led by the brokerage arm of the originator. Other banks are expected to follow.

"Investors are asking for larger [RMBS] volumes," said Luis de la Pena, an associate director at Fitch Ratings in Monterrey, citing one of the attractions for local banks. The idea is that there are caps that institutional investors can purchase in each deal and bigger sizes will give investors more wiggle room. The banks with the largest portfolios can produce the kind of RMBS volumes these investors are after.

Mauricio Tello, a rating specialist with Standard & Poor's in Mexico City, said that balance sheet considerations are also prompting banks to look into RMBS.

In addition, sources said Sofols like Su Casita, Metrofinanciera, and Credito y Casa have already broken the RMBS ice with investors, foreign as well as domestic, and banks were waiting for the opportune moment to follow their lead.

RMBS from Mexican banks or the local branches of foreign banks will differ from Sofols in the quality of the borrower, sources said. While Sofols tend to focus on lower- to middle-income homeowners, banks often have a portfolio of wealthier clients. "The profile is different," de la Pena said. "[Bank RMBS] will have different enhancements than the Sofols [and] we'll see what their servicing capabilities are."

Meanwhile, Sofols aren't standing by idly while banks start creeping into their terrain. Credito Inmobiliario, for one, is preparing to issue its first transaction backed by bridge loans.

A more familiar name, Su Casita, also has a roughly Ps730 million backed by residential mortgages in pesos on its agenda; most RMBS in Mexico are backed by loans in inflation indexed units (UDIs). The transaction has a senior/sub structure with a subordination level of about 12%.

Credito y Casa has deals in the works as well. While it's unclear whether talks to be purchased by Metrofinanciera have its transactions on hold (see p.37), the Sofol is readying Ps700 million deal backed by bridge loans for construction and a Ps1.5 billion RMBS.

Santander is leading the bridge loan deal. The Spanish bank has been unusually quiet on the securitization front over the last year, having lost terrain to other foreign arrangers with local operations. The bank was a pioneer in the field a couple of years ago but has since shifted its focus to corporate debt, according to a source close to Santander. New hires are expected to help the bank ease back into the securitization game over the next year.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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