During the first half of 2006, the Mexican securitization market justified the confidence it has inspired among emerging market players. While it took a couple of months to get started, Mexico's domestic ABS and MBS arenas cranked out Ps30.5 billion ($2.8 billion) from a total of 16 issuers (see table, p.25). The presidential elections of July 2 closed the window of issuance only for the longest-term deals and only a couple of weeks prior to the ballot. In fact, the week leading up the vote, three deals came out for the local currency equivalent of $532 million.

A total of 12 investment banks and financial consultancies led transactions in the period from January through June. Foreign arrangers kept busy, with names like HSBC, BBVA Bancomer, Citigroup unit Acciones y Valores, and Credit Suisse bringing deals.

Among the period's more noteworthy events, on March 22, sole lead Acciones y Valores closed a Ps2.2 billion, five-year transaction backed by a dollar denominated cross-border bond issued by the government of Mexico and maturing in 2011. The transaction was the first of its kind in Mexico and involved a currency hedge to mitigate the risk of transferring the dollar payments on the collateral into pesos. Local arranger Banorte followed up with a similar, but bulkier, two-tranche transaction on June 29. One tranche, totaling Ps3.8 billion piece, was backed in equal parts by Mexican bonds due 2009 and 2010, and the other tranche, for Ps1.1 billion, was backed by Mexican paper maturing in 2014.

Meanwhile, Unifin Arrendadora introduced the Mexican marketplace to another novel asset: car leases. The originator closed a Ps200 million, five-year deal via local brokerage IXE on May 24. More deals are likely, given that Unifin registered a Ps1bn shelf with regulators.

Likewise, car registration fees made their debut as an asset class in the first half of the year. The Instiuto de Control Vehicular del Estado de Nuevo Leon, an agency of the Nuevo Leon state government, tapped those fees in a 30-year transaction totaling 133 million inflation-indexed units ($44 million).

The steady drumbeat of business, particularly in the housing finance sector, keeps attracting arrangers. In the first half yet another foreign investment bank threw its hat into the peso ring, as Standard Bank made a local hire as part of a bid to enter the domestic arranging game.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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