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Chihuahua adds to Mexican toll ABS

Aug 23, 2013

Issuers are taking advantage of a brighter outlook for Mexican infrastructure

The attention now being paid to Mexico and its likely growth story has lifted several asset classes and provided opportunities to issuers. Mexico's state of Chihuahua raised 12 billion pesos ($915 million) this week through a 25-year ABS, the first part of what could be a 15 billion peso transaction.

Toll road securitizations were already an important part of the local bond market, and more are set to arrive. Concesionario de la Autopista Monterrey-Saltillo (CAMS) is in the September pipeline.

Chihuahua follows deals in June including a transaction from the state of Nuevo León and Red de Carreteras de Occidente's (RCO) domestic retap of a successful international sale.

Infrastructure-focused plays have also been taking advantage of new interest in equity issuance this year. Mexico Infrastructure Partners is preparing a certificado de capital de desarrollo (CCD) fund for Mexican pension investors, and Cemex is sponsoring a clean energy CCD fund.

Investors are betting on long-awaited growth, boosted by a shift in competitiveness and a US recovery. It is still expected to pick up, through many have been tapering expectations, especially after a revision this week of the government's own forecasts.

Bank of America Merrill Lynch cut this week its GDP growth forecast for Mexico to 1.5% from 2.5% for 2013 and to 3.5% from 4.0% for 2014. It cites larger than anticipated effects of the external and fiscal shocks that affected the economy in the first half of the year as one of the main factors.

"If GDP grows at a 3.5% annualized pace during the second half of 2013 (our current expectation), growth would reach only 1.2% for full-year 2013," Itaú says. "This evidently makes our current 2.3% growth forecast for this year (and the 2.7% market expectation) seem very optimistic."LF


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