By any measure, RMBS issuance slowed dramatically in Mexico in 2008. In a recent report, Moody's Investors Service estimated volumes hit Ps35.4 billion ($2.4 billion) in 2008, from Ps30.0 billion the previous year. While 18% growth is hardly something to sneeze at, it's a sharp drop in velocity from 2006-2007. Issuance in that more ebullient period rose 61%, according to a report from IXE.

IXE and Moody's have somewhat varied overall figures, but show the same trends.

Moody's expects RMBS issuance to swing into negative territory this year. "Expected volatility in interest rates will continue to delay securitizations as issuers most likely will wait for interest rates to be at relatively lower levels to try to launch their deals," the agency said.

It pointed out, however, that volumes this year are likely to be supported by continued backing from government agency Sociedad Hipotecaria Federal to non-bank originators Sofols, and by a fairly ambitious issuance program totaling Ps10 billion from government originator Infonavit. In addition, Fovissste - a piggybank for government employees - plans to start tapping into a Ps20 billion shelf this year (ASR, 12/15/09).

RMBS Spread Blow-Out

While spreads have gapped out over the least year in every category of RMBS, some have suffered appreciably more than others. Comparing secondary pricing on Jan. 15 2009 to exactly a year earlier, IXE found that spreads on wrapped deals have edged up to 474 basis points over comparable local treasuries, from 376 basis points in early 2007.

The downgrades suffered by the monoline insurers - in this particular case MBIA and Ambac - were not the only factor pressuring pricing, IXE noted. Mexico's wrapped RMBS, originated by GMAC Financiera and Patrimonio, showed a share of past due loans that was higher than for unwrapped deals.

Even Infonavit is getting hit. Formerly one of the bright spots in the MBS universe, the government agency's deals denominated in inflation-indexed units (UDIs) have seen their spreads edge out 38 basis points to 113 basis points on the year to Jan. 15. Still, in the eyes of local investors, RMBS from the agency and from banks remain a safer bet than product from Sofols.

(c) 2009 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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