Bankers at Santander in Mexico are working overtime before the holidays. Besides an upcoming deal for the state of Mexico (see ASR 12/02 pg. 19), the Spanish bank has just launched a program for the highway system of the state of Chihuahua. In late November, it priced Ps1.4 billion (US$136.3 million) at a real rate of 7.5%, which translates to as spread of 175 basis points over inflation-indexed treasuries. The structuring agent is Corporativo en Finanzas.

With an overcollateralization of 2.1 and a reserve fund equal to 15 months of payments, the 10-year Chihuahua deal won a AAA' national-scale rating from Fitch Ratings and AA+' from Standard & Poor's. It is backed by toll road revenues from nine highways in the state.

The entire program amounts to Ps2.5 billion (US$243.4 million). Santander expects to issue another chunk this month and is aiming for Dec. 17, said a source close to the transaction. The bulk of proceeds on the initial issue went to repay debt owed a government bank and to set up the reserve fund. Subsequent issues will bankroll new infrastructure projects in the state.

As of press time, Santander had slated a Ps800m (US$77.9 million) ten-year bond for the Mexican municipality of Guadalajara on Dec. 6 or Dec. 9 (see ASR 12/02, p.19). Fitch has already rated the deal AAA' on the national scale. S&P is rating the transaction as well. Pricing will come on top of three-month or six-month Cetes.

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