Mexico ABS Seen Picking Up

Mexico’s securitization market is set to have a good year, as the Mexican economy stabilizes, according to S&P. However, any potential financial uncertainty could dissuade investment in new issuance. “Overall 2011’s structured debt issuance will be similar to 2010,” it says. Issuance in 2010 was $8.7bn equivalent. Mexican structured finance issuance in 2010 was made up of 34% RMBS, 22% ABS, 36% future flows, 4% synthetics and 4% partial credit guarantees. The issuance and performance of ABS is expected to remain strong. “For auto loans, trade receivables, and consumer loan transactions, we don’t anticipate any ratings actions in the short term (6 to 12 months),” says S&P. Issuance activity of synthetics and PCGs is expected to be similar in 2011 compared to 2010, with transactions adding up to $166.8m. S&P expects Infonavit and Fovissste to continue to issue large amounts of RMBS. In 2010, 9 transactions of loans originated exclusively by Fovissste and Infonavit were rated, with the total number of RMBS declining 24% since 2009. The construction sector is expected to continue to face challenges, as in 2009 and 2010, and as a result so are construction loan securitizations. During 2010 S&P withdrew 11 ratings, and downgraded 6 because they failed to pay back principal on time. Securitization of new assets, such as guaranteed consumer loans and microloans are also expected this year. The agency adds that it anticipates new participants in the market and fewer negative ratings actions. In total, considering all types of issuance, S&P downgraded 45 series and affirmed 35 ratings during 2010.