Mexican interest rates had been zigzagging upward since the beginning of the year with talk of a U.S.-led strike against Iraq. But last week was exceptionally ugly. The quickening beat of war drums in Washington shot rates to the sky and bankers scattered for cover. Yet one deal managed to land on firm ground, though the hostile climate obliterated chances for an upsize. BBVA Bancomer and Inversora Bursatil brought forth a Ps500 million (US$45 million) bond backed by loans that BBVA extended to Sears Roebuck de Mexico and Procelanite. Both are subsidiaries of Grupo Carso, a giant industrial-retail conglomerate. Structured to match the terms of the loans, the three-year deal came at 140 basis points over three-month Cetes treasurys. Standard & Poor's and Fitch Ratings assigned the transaction AA' on the national scale.

The transaction is a slice of a Ps5 billion (US$454 million) program for Grupo Carso, which has retained Ritch, Heather, and Mueller as legal counsel.

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