Fixed in Place?

May 1, 2012

Mexicans are optimistic about a rebound in the domestic securitization market. However, several challenges remain and volumes still lag peak pre-crisis levels.

The robust issuance in Mexican residential mortgage-backed securities (RMBS) during 2003-2007 is now a distant memory. Issuance in RMBS and in other asset-backed securities (ABS) has ground to a halt in the asset class, for all but government-backed entities such as Infonavit and Fovissste. There is still a need for home financing, though, and there are plenty of small and mid-sized companies in Mexico that could be seen as candidates to raise funds through securitization. Issuers and investors are still confronting several key regulatory and market issues as they look to get the stagnant Mexican securities market slowly back on its feet.

A lack of consistency and transparency are two main issues in need of resolution, particularly in the RMBS sector. Also, delinquency rates on some debt remain relatively high, resulting in investor confidence in the asset class that has yet to recover fully, making a revival challenging.

"In terms...

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