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 Puerto Vallarta Real Estate | August 2007 
Infonavit Plans to Sell Debt in U.S.
 Guillermo Parra-Bernal & Jose Enrique Arrioja - Bloomberg
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Infonavit, Mexico's housing agency, plans to sell mortgage-backed bonds for the first time in the U.S. this year, betting the bonds' high ratings will overcome investor skepticism.
A law that allows Infonavit to deduct monthly loan payments from borrowers' paychecks and the agency's investment-grade rating likely will lure U.S. debt buyers into the bonds, Chief Executive Victor Manuel Borras said in an interview. The size of the sale won't be ``significantly big,'' as investors have been shunning mortgage-backed debt in recent weeks.
"For us, the market to tap is in the United States," Borras, who called the issue a "pilot test," said from Mexico City. "For us, there is strategic value in proving that we can participate in markets others than Mexico. We don't foresee any contagion effect" from the subprime crisis.
Infonavit's bet comes as the world's major ratings services downgrade billions of dollars of similar securities issued in the U.S. The value of mortgage debt in the world's largest economy plunged last month following a surge in late payments by borrowers. The task of convincing U.S. investors that the company's stable cash flow and credit quality differentiate it from U.S. subprime lenders may be too tough, analysts said.
"There's a significant chance that bond investors view the offering with concern," said Arturo Sanchez, a structured finance analyst with Standard and Poor's in Mexico. S&P rated the company's credit risk as an issuer BBB, the second-lowest investment-grade rating, on July 19.
Mexican Government
Infonavit is an agency wholly owned and operated by the Mexican government. The company is still seeking permission from the U.S. Securities and Exchange Commission to proceed with the transaction, he said.
Infonavit, an acronym for Instituto del Fondo Nacional de la Vivienda para los Trabajadores, is Mexico's largest manager of funds directed to housing, with $33.6 billion in assets under administration as of March, according to S&P. The company had 13.6 billion pesos ($1.24 billion) of outstanding local debt by the end of the first quarter.
Borras said the sale may take place by the end of the third quarter depending on market conditions. The transaction may occur simultaneously with the sale of up to 4 billion pesos of mortgage bonds between September and October, which would be a record offering for the company in local markets, Borras said. Infonavit also has plans to sell 12 billion pesos of mortgage bonds to Mexican investors next year.
Grupo Financiero Banamex SA, the Mexico-based unit of Citigroup Inc., is advising Infonavit on the sale in the U.S., Borras said. Citigroup is the biggest U.S. bank.
To contact the reporters on this story: Guillermo Parra-Bernal in Sao Paulo at gparra@bloomberg.net ; Jose Enrique Arrioja in New York at jarrioja@bloomberg.net |
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