Mexican States Issue Oil-Backed Debt

Mexico’s government has raised MXP32bn on behalf of its states in a securitization backed by the FEIEF oil stabilization fund. The 13-year transaction is issued through a trust backed by the states and priced at TIIE plus 181bp. It was placed privately with 12 Mexican commercial banks, according to local press and wire reports citing finance minister Agustin Carstens. The transaction uses resources from the fund to purchase a zero-coupon government bond guaranteeing principal, according to government officials. It could be amortized earlier than 13 years if enough money is accumulated in the fund.