Already one of the most populous metropolitan centers in the world, Mexico City is sprawling somewhere new. Following the lead of other subnational entities in the country, this monster megalopolis has surveyed the terrain of structured finance and apparently likes what it sees. According to sources, the Federal District (FD) - the city's heart - has handed a mandate to Citibank for a transaction amounting to at least Ps2 billion (US$192 million).
Other state and municipal issuers in Mexico have entered the securitization market brandishing their most tried-and-true asset, federal participation revenues. Recently, the State of Mexico, a jurisdiction distinct from the Federal District, broke away from the pack and backed a deal with payroll taxes. But neither is an option for the FD. "It can't take on debt directly, it's against the law," said one source. So it appears the transaction will be a CLO, backed by a loan that Citibank will lend the FD via the Federal Government and then securitize.