Mexico's Grupo Tribasa is motoring back into the market with a toll-road deal, making this the third securitization from the construction conglomerate since it began shedding the financial difficulties brought on by the so-called Tequila Crisis of the mid 90s. The transaction is relying principally on overcollateralization as enhancement and it comes unwrapped, unlike its first post-crisis deal, which had a surety from MBIA.

"The company no longer has its debt payments suspended," said a source close to the deal, adding that the guaranty from MBIA came at time when the company was harder pressed to win over bond investors. The group's second securitization, issued last December, was also unwrapped.

The course taken by Tribasa - dispensing with a wrap once it regained a foothold among local investors - is not a sign that opportunities for monolines are dwindling among toll roads or other large projects seeking long-term financing, sources said.

MBIA is heard working on other deals in Mexico's domestic market and XLCA and Ambac have expressed interest in wrapping deals there, although they have yet to do so.

Collateral for the upcoming Tribasa deal consists of toll road receipts from a stretch of highway between the cities of Tenango and Ixtapan de la Sal. While the terms have not been finalized, the deal will probably be sized at Ps700 million ($66 million) and carry a 17-year maturity. Interacciones is the sole placement agent, while Corporativo en Finanzas is the structurer. The originators are Tribasa Sector Construccion and Triciesa, both units of the same group. Fitch Mexico has given the deal a preliminary rating of AA+(mex)' on the national scale. The denomination is inflation-indexed units, known as UDIs. Issuance will most likely be no earlier than September, as the market is usually quiet in August.

Part of the proceeds is going to refinance a Ps315 million loan with state-owned Banco Nacional de Obras y Servicios Publicos. Unlike with earlier debt, Tribasa has never missed a payment on this particular loan, which was granted in 2003, according to a source close to the company.

Revenue and traffic on the highway has steadily picked up over the last nine years, after careening into a trough in the mid 90s. Average daily traffic rose from under 3,000 vehicles in 1995 to over 5,000 in 2004, according to a preliminary prospectus on the transaction registered with the Mexican Securities Exchange. In nominal terms, toll income on the highway has risen from Ps10 million in 1995 to Ps78 million in 2004. The figure reached Ps22 million in the first quarter of this year.

In its assessment, Fitch factored in the possibility that future traffic growth might not be sustained at its recent clip of 6% or that toll increases might fall short of expectations, according to Claudia Prats, an analyst with the agency. "Tolls are adjusted every six months, based on annual inflation," Prats said. She added that in past economic downturns the government agency that revises tolls, the Secretariat of Communications and Transport, held increases below inflation in order to soften the blow for drivers. That redoubled the pain for the toll road operator, which ended up facing a fall, in real terms, of revenue per vehicle, coupled with a recession-induced drop in overall traffic. "We projected for these scenarios," Prats said.

Spanning 40 kilometers (24 miles), the Tenango-Ixtapan toll road lies south of the city of Toluca in the State of Mexico. It links the tourist zone of Ixtapan de la Sal to the predominantly agricultural area around Tenango.

The road has had a bumpy history. Tribade, another Tribasa unit, initially held a concession for Tenango-Ixapan that ran for 18 years and was granted by the state government on Dec. 2, 1994. Suffering a nasty hangover from the Tequila Crisis, Tribade surrendered its rights to the toll-road revenue for a number of years to a third company. The holding group Tribasa was in terrible shape as well, having filed for Mexico's version of Chapter 11 Bankruptcy. Following Tribasa's launch of a recovery strategy that included securitizing toll road revenue, group units Tribasa and Triciesa took over the Tenango-Ixtapan concession in January.

Tribasa's last foray into the securitization market was a Ps1.85 billion, seven-year deal for the Penon-Texcoco highway, which had unit Pac as the originator. That transaction priced at 295 basis points over the benchmark TIIE for up to six months. As a floater, it included insurance against a spike in the interest rate beyond 13%. In that scenario, the insurer, Banco Santander, pays the difference to bondholders, according to a source familiar with the deal. The Tenango-Ixtapan deal has no such coverage because it is denominated in inflation-indexed UDIs, a source close to the deal said.

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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