There are some encouraging signs of life in the cross border structured finance arena. According to Sam Fox, head of EM structured finance at Fitch, a pickup in discussions on issuance and requests for ratings are signs of liquidity returning. But pricing on these deals is likely to stay wide thanks to a new issue and global risk aversion premium. Fox estimates that broadly speaking, pricing may come 75-125 basis points over what was seen a year ago.

Meanwhile, in local markets, a range of Mexican issuers are coming with deals backed by infrastructure revenues, mortgages and auto loans. The availability of financing in local markets is evidence that some have attained a degree of autonomy from global trends.

IDEAL Brings Jumbo Program
IDEAL, a concessions operator belonging to the Slim group, filed in late April a 50 billion peso master trust securitization program issuing debt backed by toll road revenues. IDEAL was set to roadshow the first transaction from this trust, which may be worth up to 11 billion pesos. The offering will be divided into three tranches: a seven-year floating rate tranche with a 4.5-year average life; and two fixed-rate tranches – one denominated in UDI inflation-linked units and the other in pesos – with an average life of 20 years each.

The debt is backed by revenue streams from four toll roads: Chamapa-La Venta; Libramiento-Toluca; Tepic-Villa Union; and Tijuana-Tecate. In a novel feature, the trust is open ended, meaning new roads can be brought into the vehicle for ABS issuance at the company’s will. A local rating of AA+ or AAA is expected, say bankers. Credit Suisse is structuring and placement agent, with Inbursa as a joint placement agent.

Inflation-linked MBS
Mexico’s federal housing fund Infonavit last month placed a 3.13 billion peso-equivalent issue of 2030 RMBS denominated in UDIs. A 1.346 billion peso-equivalent tranche priced at 4.40% and a 1.782 billion peso-equivalent tranche came at 4.78%. Both have a final maturity of 2030, and a separate time tranching structure in which the smaller tranche has a weighted average life of 2.56 years while the larger one is 7.7 years.

The AAA rated notes were mainly purchased by insurance companies, pension funds and brokerages. Deutsche Bank and Banamex managed the sale. The deal is the first from a 15 billion peso program.

Fellow lender Su Casita followed with 1.9 billion pesos in an UDI-denominated 2033 RMBS. An 838 million peso-equivalent senior tranche with a weighted average life of three years priced at 159 basis points over the comparable UDI Bono. A second 887 million peso-equivalent senior tranche with a weighted average life of 12 years came at 174 basis points over.

A 174.2 million peso-equivalent subordinated tranche was also done, at 405 basis points. The AAA rated first and second senior tranches were 3.3x and 2.9x oversubscribed, respectively. The transaction was managed by Santander and HSBC.

Bear’s Peso Trade
Despite lurid headlines about Bear Stearns’ collapse, the shop was structuring and placement agent on a 2.9 billion peso private placement for Ford Credit Mexico Auto Trust 2008-1. It includes a 1.685 billion peso AAA piece due 2009 (average life six months) at 75 basis points over 28-day TIIE.

There is also a 947 million peso AAA tranche due 2010 (1.6-years) priced at 85 basis points over TIIE and an A2/A 430 million peso slice due 2012 (2.5-years) at 157 basis points over TIIE. The reference pool consists of retail auto loans originated by Ford Credit de Mexico. The securities were offered only to Mexican institutional investors.

Bridge Loans Worry
Meanwhile, in Mexican housing, signs of a slowdown in sales are starting to affect the performance of issuance backed by construction bridge loans. “Home inventories are growing and there are symptoms that the sales-construction cycle is lengthening, suggesting a decrease in the demand for housing,” says Fox. “Investors have to be more selective in the way they understand these portfolios going forward.” Offerings from sofoles backed by bridge loans are particularly vulnerable.

Among such upcoming deals is one by Metrofinanciera, which was preparing to sell 2.5 billion pesos in six-year bonds backed by construction bridge loans in April via Ixe. The floating-rate offer will include an A tranche and a subordinated B tranche.

In mid-April, Moody’s placed existing construction loan-backed issuances by Metro on review for a downgrade, citing concerns about the slower than anticipated amortization of loan pools. The series affected are: METROCB 02, METROCB 03-2, METROCB 03-3, METROCB 04, and METROCB. The pools are rated on the national scale.

Moody’s also downgraded Metro’s short term local rating to MX-3 on concerns the sofol has substantial near-term maturities as well as the fact that its long term profitability may suffer a slowdown in housing.

Colombiana Adds to RMBS
Colombian mortgage securitization company Titularizadora Colombiana placed 207 billion pesos ($116 million) in an April RMBS transaction. A 148 billion peso 2018 senior tranche priced at 11.15% and saw about 320 billion pesos in demand, according to a Titularizadora official.

A 42 billion peso 2023 senior tranche meanwhile came at 11.5%. Two 2023 subordinated pieces totaling 17 billion pesos were done at 12.5% and 13.0%. The bonds are backed by a portfolio of mortgage loans from Banco Colpatria and Banco Davivienda.LF