Mexican states and municipalities keep swapping securitized debt for bank loans (ASR, 2/13/06) and the State of Mexico is next up to take advantage of overflowing liquidity in the banking sector, according to sources.

The issuer was toxic to lenders only a few years ago, leaving it few options but to securitize its co-participation revenues and hope market-based investors would bite. Now Banco Inbursa is dangling conditions before the state that trump those of its remaining outstanding bonds, which number two from an initial six.

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