NEW YORK, Feb. 14 /PRNewswire/ -- In light of the recent Standard & Poor's
upgrade of the United Mexican States to investment grade, new developments can
be expected in its structured finance market. Within Latin America, Mexico has
been one of the most important sources for local and cross border structured
finance transactions. Thus, its new investment-grade rating will open up the
structured finance market to new companies and asset types, as well as permit
access to a more diversified international pool of investors.
In recent years, Mexico has reached the second market stage of Latin
American securitization. In this stage, issuers have started to securitize
existing assets in local currencies in the domestic capital markets. Local
investors, with important investment muscle (namely pension funds), have
exercised their strength by demanding new and more innovative structured
finance transactions (that is, accounts receivables securitizations and
partial credit guarantees). "Local investors now view structured products as
an interesting investment alternative to more traditional fixed-income
securities," said Juan Flores, Standard & Poor's Associate Director for
Structured Finance in Mexico City.
As a result of the improvement in Mexico's country risk, reflected in the
recent upgrade to investment grade, Standard & Poor's expects Mexico to enter
into the third market stage of Latin American securitization in 2002. In this
stage, issuers tap international markets with existing asset securitizations
denominated in local currencies.
The existing asset types that are better equipped to pioneer the third
market stage in Mexico are both the residential and commercial mortgage-backed
markets. In recent years, Mexico has suffered from a large housing deficit, as
well as an increasing demand for commercial office space. As a result, the
recent announcement by the Mexican government to build 750,000 low-income
housing units per year by 2006, could trigger the opportunity for developers
to look for financing in the structured finance international markets. At the
same time, the recent creation of Mexico's federal mortgage bank will
certainly foster the development of primary and secondary mortgage markets in
Mexico. As of September 2001, the low-income housing mortgage portfolio
totaled just over Ps42 billion.
Under these circumstances, Standard & Poor's expects that Mexico's
investment-grade rating will ease the way for the country to achieve the third
market stage of Latin American securitization, and as such, create more
efficient approaches to access long-term international funding.
For a copy of the related article, "The Three Stages of Latin American
Securitization," published June 14, 2000, please visit RatingsDirect, Standard
& Poor's web-based credit analysis system at http://www.ratingsdirect.com, or
contact: Juan Jose Flores, Latin America Structured Finance,
juan_flores@standardandpoors.com; or, Cesar Fernandez, Latin America
Structured Finance, cesar_fernandez@standardandpoors.com.
SOURCE Standard & Poor's
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Related links:
http://www.standardandpoors.com/ratings
CONTACT:
Juan J Flores, +52-55-5279-2020, or Cesar
Fernandez, +1-212-438-2681, or Rosario Buendia, +1-212-438-2410,
all of Standard & Poor's
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