Talk is picking up in the Mexican market that a couple of bonds backed by bridge loans for construction will be priced this year. This follows an issuance drought since the first such deal struck in December 2001. "There are two that should be coming out soon," said Maria Tapia, ratings specialist at Standard & Poor's Mexico City office. She said the deals will each total Ps500 million to Ps600 million (US$50.1 million to US$60.1 million) and will be backed by assets generated by one or more SOFOLEs - special-purpose financial companies that dominate the sectors of low-income mortgages and bridge loans for housing construction.

The structures are heard to be similar to the sector's debut - Ps750-million (US$75.1 million) in notes due 2007 placed last December via structuring agent Deutsche Bank. Hipotecaria Nacional - a SOFOL - sold the rights on bridge loans into a trust structure. Banco Invex was the trustee of the transaction and the paper priced at 165 basis points over 182-day Cete Treasurys. Interest payments are semi-annual, and amortization kicks in with the tenth payment. The deal, rated AA' on the national scale, is structured as a revolving facility, since the bridge loans normally have maturities of 18 to 24 months.

Bolstering the rating is a fund reserve equal to at least the next payment and restrictions on the bridge loans backing the deal. Bridge loan contracts immediately transferred to the trust amounted to 17% of the principal of the bonds. The loans needed to cover 100% of the principal are being generated over a period of 18 months from the date of issuance.

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