Su Casita Slams MXP Construction Loans

Moody’s has downgraded Su Casita’s HSCCB 08 series A certificates, secured by construction loans, to Caa2 from Ba2 on a national scale. DCM bankers say the rating action means it will be very difficult for either Su Casita or other private mortgage lenders to issue this type of debt in future. “This market was basically closed after the crisis and given that this is the biggest in the sector, this just confirms it,” says one head of DCM. The ratings action was based primarily on the downgrade of the issuer on September 13 to Caa2 from Baa3 on a national scale. Moody’s also placed the mortgage lender on review for further possible downgrade. The ratings action was taken because the mortgage lender and BBVA Bancomer stopped negotiations for the bank to buy part of its loan portfolio, as they were not able to agree on valuation. Moody’s adds that Su Casita’ liquidity position is weak and the company has funds to cover existing debt only until the middle of Q1 2011, when the company would face a liquidity shortfall. It adds that the pace of home sales is slow and many loans are expected to require an extension.