A few Mexican players have locked their sights on a virgin patch of ABS terrain, and, if they have their way, it'll be covered in trees within a few years. Structurer SAI Consultores has teamed up with placement agent Credit Suisse in a deal that combines some of the riskier elements of forestry securitization with the safety of local treasuries. Timber and cattle company Agropecuaria Santa Genoveva is originating the deal, currently sized at between Ps1.5 billion ($137 million) and Ps2.2 billion, and potentially due before year end, according to Gustavo Meillon, a senior associate at SAI.

The architecture of the transaction is fairly straightforward. A portion of the proceeds - probably somewhere near half - will go to buy a zero-coupon bond that ensures ABS investors will have their principal protected at the triple-A level on the national risk scales of the corresponding rating agencies. The remaining proceeds will go to purchase the land on which the collateralized trees will grow. A share of the sales of those trees will flow back to the bondholders.

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