Edomex Lands Long-Awaited ABS

State of Mexico (Edomex) has finally issued an innovative MXP4.065bn 20-year deal securitizing future flows of income from residential property title fees, which it had been working on since the middle of last year. The 2030 Edomex deal has a 14-year average life, pays fixed rate and is divided into 2 tranches. An MXP2.765bn tranche features a 100% guarantee from OPIC and was priced at 132bp over Mbonos, paying a 7.86% coupon. Total demand for the tranche was MXP3.83bn, says a banker on it. It is rated AAA on a national scale. It is the first time OPIC has fully guaranteed a transaction in the local market outside the US, say bankers at the leads. The MXP1.3bn tranche carries a 30% first loss guarantee from CAF, it is rated AA on a national scale and was priced at Mbonos plus 359bp, with a coupon of 10.13%. Total demand for the second tranche was MXP1.621bn. The deal had taken so long to complete because of hold ups at the regulators, due to the novel nature of the transaction, according to a banker at one of the leads. The deal had taken so long to complete because of hold ups at the regulators, due to the novel nature of the transaction, according to a banker at one of the leads. Banamex and HSBC managing the sale, which was structured by MBIA. Of the proceeds raised, 15%-20% will go towards improving the infrastructure of the state’s public registry offices and the rest will go towards infrastructure projects in the State of Mexico. A banker at one of the leads claims it is the first of its kind and could be replicated by other Mexican states. It marks 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 2009.