Category: Structured Finance

Mexico’s federal housing fund Infonavit plans to sell about MXP3.5bn worth of RMBS at the end of August, José de Jesus Gómez, a director at the mortgage lender, tells LatinFinance. The UDI-denominated offering will add to a modest pipeline of mortgage-backed paper that is building despite hostile market conditions. Last week BBVA Bancomer landed a record MXP4.83bn RMBS issue, rekindling hopes for a market has struggled in the face of sub-prime concerns and rising local inflation and interest rates. The Infonavit issue, tentatively slated for August 27, will be similar in size and structure to the MXP3.5bn 25-year UDI- denominated offering placed June 10. That deal involved two tranches with average lives of 2.8 years and 7.7 years at 110bp and 129bp, respectively, over comparable udibonos. Gómez hopes for similar spreads, though he acknowledges that will depend heavily on shifting market conditions. Banamex and Deutsche Bank are leading the deal, with HSBC as co-lead. The issue will bring 2008 cedevis issuance to about MXP10bn, within reach of the lender’s MXP15bn target for the year.

HSBC is preparing to sell MXP2bn in RMBS, according to a regulatory filing. The offer will be divided into two MXP1bn tranches, which amortize one after the other. The bank has not specified a tenor, but the pool of 2,785 of its own mortgage loans backing the issue have maturities of up to 20 years. HSBC’s own capital markets unit will manage the transaction. The shop has not set a date for the sale, which will follow this week’s record placement of MXP4.83bn in 2033 RMBS by BBVA, in what has otherwise been a challenging year for local MBS. HSBC’s issue is the third from a MXP10bn shelf, from which it last issued MXP3.5bn in 2025 RMBS in October 2007.

Despite rotten market conditions, BBVA Bancomer has placed MXP4.829bn equivalent in UDI-denominated 2033 RMBS, the largest MBS sale to date from Mexico. Although liquidity remains ample among Mexico’s institutional investors, widening spreads and general volatility have scared RMBS issuers into waiting or downsizing. “It’s been a challenging year, but Bancomer is one of the strongest banks in Mexico, and the collateral backing this issue has a strong payment record,” says Moody’s’ Carlos Benavides, noting the assets’ few historical delinquencies compared to other transactions Moody’s has rated this year. BBVA was heard wanting to come this week – at what might be seen as a difficult moment – to avoid clashing with Pinfra’s MXP6.5bn structured transaction to refinance debt on the Mexico-Toluca road concession. The first MXP2.415bn tranche on BBVA’s deal priced at 4.61%, and a second same-sized tranche, which amortizes after the first, priced at 5.53%. Both mature in 2033. Each tranche was 1.2x subscribed by nine and 14 buyers, respectively, according to a banker on the sale. Afores and mutual funds made up most of the book. BBVA’s capital markets unit managed the sale and says guidance was not issued.

BBVA Bancomer plans to sell MXP4.83bn in 2033 RMBS today, in what would be the largest Mexican offering of its kind to date. It comes as Mexican mortgage-backed issuers have been scaling back their pipelines and cutting down individual issuance sizes as spreads have widened and demand fizzled. According to state mortgage lender SHF, average spreads for peso-denominated RMBS, which were less than 40bp over corresponding government benchmark bonds at the middle of last year, flared wider than 130bp in May and have remained well above the 100bp mark. Spreads on inflation-protected RMBS denominated in UDIs have edged out from below 70bp to wide of 150bp during the same period. The Bancomer offer rated AAA on a national scale will be denominated in the UDI inflation-linked unit and consist of two equal tranches that amortize one after the other. The notes are backed by a pool of 9,000 of Bancomer’s own mortgage loans. The bank’s own capital markets unit is managing the transaction, the third from a MXP20bn program initiated in December. Bancomer pulled an offering of up to MXP2bn in peso-denominated 2028 RMBS in June.

BBVA Bancomer plans to sell MXP4.83bn in 2033 RMBS as soon as Wednesday. If sold at the full amount – unlikely, given the volatile nature of the market – it would mark the largest Mexican RMBS offering to date, according to S&P, which rates the transaction AAA on a national scale. The offer will be denominated in the UDI inflation-linked unit and consist of two equal tranches that amortize one after the other. The notes are backed by a pool of 9,000 of Bancomer’s own mortgage loans. The bank’s own capital markets unit is managing the transaction, the third from a MXP20bn program initiated in December. Bancomer is returning with a different structure than the offering of up to MXP2bn in peso-denominated 2028 RMBS pulled in June. That was to have been the program’s third. RMBS in Mexico has totaled $1.47bn this year to date, according to Dealogic, off pace to match 2007’s $3.52bn.

A modest Mexican RMBS pipeline is building after a lackluster first half, with mortgage lenders Su Casita and Metrofinanciera confirming pending Borhis deals after a recent dip in local long-term government rates. But 2008 issuance will be well below the government target, issuers expect higher funding costs, and more bad news on inflation could favor inflation-protected deals in UDIs. Pedro Guazo, CFO at Mexican state mortgage bank SHF tells LatinFinance that 5 Borhis deals are in the pipeline worth MXP23bn. That would bring the year’s total to MXP30bn, well below the previous SHF Borhis target of up to MXP50bn. Metrofinanciera plans a more than MXP1bn peso deal through Deutsche Bank for late September if market conditions permit, says CFO Nicolas Palacios. He expects to pay up to 40bp more than an April issue, which came at 250bp over TIIE. Su Casita CFO Mark Zaltzman says he plans an UDI-denominated deal worth about $200m in coming months, also dependent on market conditions. Zaltzman says MXP deals are not viable after Banxico revised up its 2009 inflation estimate Wednesday.