Geo Readies AGSA Lookalike

Geo Maquinaria, the construction rental unit of Mexican homebuilder Geo, is preparing a rental contract receivables securitization worth up to MXP3bn, according to regulatory documents. The 15-year transaction is to have a structure similar to last year’s innovative teak tree revenue securitization from grower Agropecuaria Santa Genoveva (AGSA). The rental contracts will be placed in a trust and initial proceeds will purchase a zero-coupon government bond to guarantee principal, with investors receiving a percentage of returns from the machine rentals. The transaction is different from AGSA, bankers on the deal say. They claim that rental contract income is less uncertain than AGSA’s wood sales, as rental contracts are already signed with Geo’s homebuilding unit. Though the necessary machinery is already in place, funds raised from the transaction will go to maintaining and adding to the construction rental fleet. As with AGSA, Geo’s will be marketed mainly to Mexican pension funds. Banorte and Santander are managing the transaction. Last July, AGSA Agropecuaria placed MXP1.65bn in 2028 securities via a novel structure that pays holders 40% of the revenue from sales of teak wood. The AAA transaction was managed by Credit Suisse.