Bear Stearn's encounter with a Standard & Poor's downgrade warning and BNP Paribas' lockdown of three ABS funds served as stark reminders that subprime isn't through with the markets yet. Spreads across the board shifted further out. But subprime isn't hitting every asset class with equal force, and the re-pricing is still hardly grounds for panic given how lush the credit environment has been for the last few years.

For emerging markets, the pinch is most apparent on the cross-border side. It being summer, there aren't too many pricing signposts, but a pair of deals point to tougher conditions. Mexican originator Metrofinanciera closed a two-tranche deal on July 31 collateralizing construction bridge loans. Arranged by Credit Suisse, the transaction appeared to have escaped the worst excesses of the turbulence. Still, it wasn't Metrofinanciera's finest pricing moment. The Ps1.4 billion ($128 million), seven-year A piece priced at 115 basis points over 28-day TIIE. That's well over the 94 basis-point spread over 28-day TIIE that the originator obtained on a Ps1.7 billion bridge loan deal in January. Granted, there's one big difference between the two. The more recent one was cross-border - both foreigners and locals bought in - while the January deal was domestic. That explains some of the pricing discrepancy, but not all.

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