The Mexican state of Veracruz is getting a head-start on 2004. Looking to finance some of next year's capital projects before the current governor leaves office, the issuer is securitizing payroll taxes in a Ps450 million (US$42 million) deal. Protego Asesores has structured the transaction and Grupo Bursatil Mexicano will be issuer. The issue is the third payroll-tax structure to emerge in Mexico. With Protego as structurere, the State of Mexico issued the first such transaction via Santander Serfin. Currently, the state of Nuevo Leon has a payroll deal in the pipeline via Value Casa de Bolsa (see ASR 7/21, p.17).

Veracruz raked in Ps863 million (US$81 million) of payroll taxes last year, totaling a marginal 2.5% of total revenue. Like most subnationals, the bulk of the state's income comes in the form of federal participation revenue. Earlier this year, Veracruz pledged up to 55% of those revenues in a two-part loan totaling Ps2.73 billion (US$256 million). State development bank Banobras provided Ps2 billion (US$187 million), while homegrown bank Banorte extended Ps733 million (US$69 million).

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