In their quest for new funding options, Mexican originators are looking to Europe. Covered bonds, which are old hat in the old world, have never been done in Mexico, but players anticipate their arrival. Bankers, particularly those at European banks, have been pitching the idea for months, yet some hurdles need to be cleared for the instrument to achieve long-term growth, players said.

Over the past few years, Mexico has turned out securitizations collateralizing mortgages and construction loans at an ever-increasing clip. While originators have also begun tapping foreign appetite for these products by drawing buy-siders into the domestic market and going cross-border, they are constantly on the make for new investors. Here's where covered bonds come in. "We're looking at covered bonds as an option for this year," said Mark Zaltzman, deputy head of corporate office at Hipotecaria Su Casita, a sofol, or nonbank, originator.

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