Upcoming presidential elections in Mexico were bound to inject a degree of volatility into the peso market, but turbulence is also blowing in from abroad. Foreign investors are re-evaluating a historically low risk premium for emerging markets and Mexico has been suffering a drop in asset values as a result. "Last week was pretty ugly," said a Mexico City-based investment banker.

On the bright side, domestic issuance of securitizations has yet to stall, with two deals closing last week, and others expected before July's ballot. On May 24, auto-lease originator Arrendadora Unifin settled a Ps200 million ($17.9 million), five-year final transaction at 95 basis points over 29-day TIIE. Standard & Poor's rated the deal mxAAA' on the national scale and the sole arranger was IXE. The deal marks the company's debut in ABS. More deals backed by the company's car leases are likely to follow, given that Unifin registered a Ps1 billion shelf with regulators.

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