Mexico plowed forward in June, with about Ps11.2 billion ($1.09 billion) in structured finance issuance, as measured by local shop IXE. That was only a 6% drop from the Ps11.9 billion placed in the same month last year, a clear sign that activity hasn't been severely crimped by retreating liquidity.
So far this year, the most active sub-sector in Mexico's domestic securitization market consists of deals backed by existing assets, including mortgages. Of the 78 outstanding RMBS in the market, 29 were issued in the past year. Still, suffering from the credit crunch and issues endemic to Mexico's housing sector, the pace of issuance appears to forecast little or no growth in issuance this year.
Similarly, CDOs, while not beset with the problems facing deals abroad, are still lagging behind last year's figures. Not a single CDO was placed in June.
In contrast, the future flows asset class, which includes sub-sovereign and toll road deals, looks set to beat its volumes last year. Some Ps16.9 billion in issuance has hit the market in the first half of 08, compared to Ps19.8 billion for all of last year.
One significant future flow transaction that closed in June was a multi-tranche paper from concessionaire Promotora del Desarrollo de America Latina, known as Ideal. The deal collateralized toll road receipts from four highways operated by the company and featured an unusual multi-tranche structure, with one denominated in fixed pesos, one in floating pesos and the third indexed to inflation. All three were rated triple-A on the national scales of Fitch Ratings and Moody's de Mexico.
The first tranche of the deal, sized at Ps1.3 million with a 28-year legal final maturity, priced to yield 10.5%. The second tranche, worth Ps1.5 million with a seven-year final, priced to yield 28 basis points over 28-day TIIE. The third tranche, amounting to 1.07 billion inflation-indexed units (UDIs) ($417 million) with a 28-year final, priced at 5.69%.
Projected debt-service coverage is no less than 1.75x. The highways are located in three different states, diversifying the geographic risk of the transaction. Inversora Bursatil and Credit Suisse were joint arrangers.
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