Joining its subsovereign peers, Mexico State has exited the bond securitization business. With a recent 15-year asset-backed loan for Ps750 million ($68 million), the originator retired the last two of its bonds collateralizing payroll taxes. Fitch Ratings and Standard & Poor's rated the loan AA(mex)' and mxA' on their respective national scales. The state's withdrawal from the bond market forms part of a wider trend among Mexican sub-sovereign entities swapping market debt with loans, as highly liquid banks compete for clients (ASR 2/13/06).

Extended by Inbursa, the loan is the 13th in a string of credits that the originator has assumed since November 2004. The first ten years bear a fixed rate, while the last five have a floating yield. The underlying collateral for the entire program consists of co-participation revenues from the government.

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