The reigning couple of Mexican securitizations - the subnational and housing finance sectors - have dropped two new deals into the pipeline. On the housing side, Hipotecaria Nacional (HN) has a Ps960 million (US$91 million) seven-year legal final transaction slated for August.

With Deutsche Securities as lead, the structure departs from HN's last securitization, which priced in December 2001 and amounted to Ps750 million (US$71 million). Previously, the company went the route of overcollateralization to achieve a double-A on the national scale by Standard & Poor's and Fitch Ratings. Now the issuer is relying primarily on junior and mezzanine tranches to boost the senior ratings and provide capital release.

The junior piece amounts to Ps120 million (US$12 million) while the mezzanine is Ps40 million (US$3.8 million). Marketing for the presumably junk-rated tranche will focus on banking, said a source close to the transaction. S&P has rated the senior piece mxAAA' on the national scale and the junior piece, mxA'. It has yet to rate the mezzanine slice. Fitch Ratings has not released its ratings on any of the tranches. Mijares, Angoitia, Cortes y Fuentes is legal counsel.

The Mexican housing finance market has seen nearly Ps1.7 billion (US$161 million) in issuance this year. An expected flurry of MBS issues in the second half of the year could sharply boost that number.

Meanwhile, in the realm of public credits, the municipality San Pedro Garza Garcia is returning to the market with a seven-year deal for up to Ps110 million (US$10 million), as part of a Ps200 million (US$19 million) program backed by federal co-participation revenues. Thanks largely to the asset quality, the deal is rated AAA(mex)' and Aaa.mx' by Fitch and Moody's Investors Service, respectively. Finamex Casa de Bolsa structured the transaction, while Value Casa de Bolsa is the issuing agent. Interestingly, Value is simultaneously working on a deal for the state of Nuevo Leon, the home of San Pedro (see ASR 7/21, p. 17).

Proceeds for the muni deal will go to refinancing debt, estimated at Ps66.8 million (US$6.3 million), according to a release from Fitch. The rest will be channeled to the expansion of a thoroughfare, Avenida Alfonso Reyes.

San Pedro is far less dependent on federal revenues than other municipalities. Last year, 28.6% of revenues flowed from the central government. For many subnationals, the figure is more than 80%.

Subnational issuers have issued Ps1.57 billion (US$149 million) in securitizations so far this year.

San Pedro forms part of the metropolitan sprawl of Monterrey. As a business district, the population is a meager 126,000 residents. That said, it outranks virtually all the country's other municipalities in indicators such as education, income, housing conditions and coverage of basic services.

Founded in 1596, San Pedro has a coat of arms with the motto "liberty with order and justice."

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