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.

Elsewhere in the country, Promotora y Administradora de Carretera (Pacsa) plans to issue this week a second bond collateralizing toll receipts from a stretch of highway between Mexico City and the city of Toluca in Mexico State, according to a source on the deal. MBIA is wrapping the transaction, which has a 22-year final senior piece of Ps4.2 billion and a 24-year final subordinated tranche of Ps1.45 billion. The actual denomination is in inflation-indexed units (UDIs), reflecting the underlying collateral.

Fitch and S&P will rate the senior piece triple-A on their respective national scales. HSBC and BBVA Bancomer are joint leads on the deal.

Proceeds from the transaction will go to retire a bond that Pacsa issued on Sept. 25, 2003 for a total 1.46 billion inflation-indexed units (UDIs) ($491 million) and priced at a real rate of 4.5%. MBIA provided a surety for the older deal, ensuring grades of triple-A on the national scales of all three major rating agencies.

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

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