The Mexican domestic market is officially back in business, leaving behind a stagnant few months in late spring and early summer.

Housing finance company Fincasa made its second visit to the market last week via local investment bank IXE, pricing a Ps500 million (US$44 million) securitization of bridge loans for construction on Aug. 10. Fitch Ratings and Standard & Poor's rated the five-year deal triple-A on the national scale. The yield came to 170 basis points over the benchmark TIIE, 10 basis points wide to a triple-A rated structured deal issued by micro-finance lender Compartamos July 28. Size may have accounted for the difference, as Compartamos issued Ps190 million (US$17 million) of notes.

Major pension funds and other institutional investors bought up 74% of the Fincasa deal, while retail investors and smaller pension funds for specific companies took the remaining 26%, according to a source on the deal.

The transaction closes a Ps1 billion (US$88 million) program Fincasa launched Feb. 18. Mexican housing agency, the Sociedad Hipotecaria Federal, provided an 18% partial guaranty. Fincasa is at the smaller end of a group of housing-finance companies known as Sofols.

Hot on Fincasa's heels, Hipotecaria Nacional, a much larger Sofol, issued a Ps500 million (US$44 million) six-year deal on Aug. 12, with a senior/sub/equity structure. Jointly led by Santander Serfin and Banorte, the Ps420 million (US$37 million) senior piece priced at 135 basis points over six-month Cetes, while the Ps60 million (US$5.3 million) subordinated chunk yielded a spread of 360 basis points.

On the national scale, Fitch and S&P rated the senior piece triple-A and the subordinated slice single-A. The deal is the first in a Ps5 billion (US $440 million) program. "Depending on conditions, the program could be issuing every two months," said a source close to the deal.

Next up in the Mexican market is a Ps520 million (US$46 million) deal from toll-road operator Carreteras de Cuota Puebla, led by Santander and structured by Protego Asesores. The tentative date for the transaction is Aug.19. The tenor is up to 15 years and price talk is hovering between 5.5% and 6.5% over inflation-indexed units (UDIs). Banobras is providing a guaranty for 53% of the transaction as denominated in UDIS, the first time the state bank is explicitly enhancing a securitization. Its involvement comes in the wake of other government entities offering guarantees and is in step with heavier activity on the guarantor side overall in the Mexican structured bond market.

The state of Puebla owns Cuota Puebla, which is securitizing the revenue stream from a stretch of highway linking the cities of Puebla and Atlixco.

Expected out within the next couple of weeks is an RMBS from Sofols GMAC and Su Casita via Credit Suisse First Boston. The originators are looking to close their program for 520 million UDIs (US$156 million), according to a source familiar with the transaction. So far, they have issued 178 million UDIs (US$53 million) jointly, which leaves the equivalent of US$103 million to go. The structure of the upcoming deal is heard to be more or less the same as the first one. Apparently, Dutch development bank the FMO is again providing a liquidity facility.

The FMO is also involved in a plain-vanilla bond for conglomerate Xignux. The bank is providing a 26% guaranty on a transaction for up to Ps1 billion (US$88 million). Xignux is a sprawling company active in business as diverse as car components, cables, petrochemicals and foodstuffs.

Elections loom,

Veracruz prepays

It emerged last week that the state of Veracruz prepaid the Ps203 million (US$18 million) outstanding of an initially Ps400 million (US$35 million) securitization of payroll taxes on July 22. Led by Grupo Bursatil Mexicano and structured by Protego, the 14-month deal was set to mature on Nov. 25, just days before current Gov. Miguel Aleman leaves office. His term is up Dec. 1, and gubernatorial elections are to be held in September. Aleman pledged to leave the state with no debt, according to sources.

While the deal would have paid out normally before the next governor comes in, excess revenue into the state persuaded the current administration to retire it early, even though doing so incurred a premium. "It was slight," said a source close to the deal.

The deal priced at 300 basis points over TIIE and was rated AA(mex)' by Fitch and Aa3.mx' by Moody's Investors Service.

In February 2003, Veracruz refinanced an existing secured loan with Banobras and took out a new one with Banorte for a total Ps2.7 billion (US$236 million). The loans are backed by federal co participation revenue.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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