Less Mexican MBS Seen in 2008

Despite the widely shared view that Mexico has been mostly free of subprime exposure, both banks and investors expect at least a slightly lower volume of local MBS in 2008 compared to 2007. For investors, it is a question of pricing and of confidence in ratings. “Credit spreads have widened all over the planet, but Mexican issuers still want to come out with the same spreads,” says Juan Carlos Pliego, CIO of Afore Azteca, speaking at the LatinFinance Cumbre Financiera Mexicana in Mexico City. There is also an issue of confidence in ratings agency methodologies, as well as in monoline insurers, who have seen downgrades. An aversion to housing-related products in North America may also affect appetite, regardless of the inherent strength of Mexico, say bankers.