Edomex Unleashes Long-Awaited ABS

State of Mexico (Edomex) is targeting the first week of June for a novel MXP4.3bn 20-year deal securitizing future flows of income from residential property title fees, according to a banker running it. Market participants hope the long-awaited trade can reinvigorate a peso structured debt market that has been moribund beyond a handful of government agency RMBS. If successful, Edomex would mark the first sizeable non-residential mortgage ABS in Mexico since the federal government raised MXP32bn on behalf of its states in a transaction backed by the FEIEF oil stabilization fund in September. Edomex has been working on the transaction since the middle of last year. People close to it pin the long turnaround on a Mexican DCM stalemate of late 2009 and early 2010, caused by jittery investors and cautious issuers haggling over post crisis pricing and covenants. The 2030 Edomex deal has a 14-year average life, pays fixed rate and is divided into 2 tranches. A MXP3.0bn tranche will feature a 100% guarantee from OPIC, while a MXP1.3bn slice carries a 30% first loss guarantee from CAF. Both portions are expected to be rated AAA on a national scale. Banamex and HSBC are managing the sale. Bankers and state officials claim it is the first of its kind and could be replicated by other Mexican states. The deal is structured by MBIA.