This week in the Mexican market, the state of Sinaloa is slated to price a 10-year deal. Sized at Ps830 million (US$76 million) in inflation-indexed units (UDIs), the transaction will be the first off of a Ps1.5 billion (US$138 million) program backed by federal co-participation revenues. IXE Casa de Bolsa is the placement agent, while financial consultancies Fausto Garcia & Asociados and Intefin structured the deal. Standard & Poor's and Fitch Ratings have rated the deal AA+' on the national scale.

The transaction will be priced against the government's UDI bono, an unusual step in the sub-sovereign sector. Most structured deals in this asset class are floaters, pricing at a spread to Cetes treasurys. Price talk on the transaction is hovering between 150 basis points and 180 basis points over the UDI bono.

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