Mexico Special Report: RMBS Boom Interrupted

Sep 1, 2008

RMBS issuance in 2008 is lagging behind last year and issuers have to pay up to get deals done. However, a jumbo placement signals faint light at the end of the tunnel.

Keywords: RMBS Mexico mortgages

by Greg Brosnan 

Just as prospects for Mexican residential mortgage-backed security issuance looked bleak this year amid dismal global conditions, BBVA Bancomer blew a dormant market back open with a 5 billion peso bombshell – the biggest ever RMBS issue in the country’s history.

Mexico’s biggest bank launched the record 4.829 billion peso UDI-denominated 2033 issue August 6 in two equal tranches. The first tranche priced at 4.61 %, while a second tranche that amortizes later, priced at 5.53 %. Analysts said Bancomer’s strength in the market and the strong payment record of the collateral backing the issue helped the bond sell, but relatively low demand gives a sense of challenges the asset class faces this year.

More paper is in the pipeline: In early August HSBC was also planning a 2 billion peso RMBS. But higher rates on long-term government benchmark...

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