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A REIT sprouts in Mexico, GMAC issues despite vote noise

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REITs are starting to make noise in Mexico. Moody’s de Mexico rated its first REIT last week, assigning a national scale rating of Baa2.mx’ and local currency, global scale rating of B1′ to Casablanca Trust’s proposed Ps300 million ($26 million) issuance. The paper will have a 24.5-year term. In Mexico, REITs are known by their Spanish nickname, Fibras.

Casablanca Trust will contain five private sports clubs owned by three units of Grupo Propulsa. The Fibra will sign a long-term lease agreement with Impulsora y Operadora de Clubes.

The deal’s strengths include “good profitability, strong management skill base in the sports club business, established market position in sports clubs, lack of well-established competitors of comparable quality, and high appraised value of the properties that support the proposed securities,” Moody’s said in a report. Credit weaknesses include intense geographic and asset concentration and slim prospects for growth in the property portfolio.

The sports clubs’ real estate are backing the Fibra’s securities and investors will receive a dividend based on the TIIE benchmark plus a spread that has an 18% cap and 9% floor. Securities holders will enjoy the right to veto a potential sale of any of the underlying properties. If they agree to a sale, they have the right to receive 43.11% of the proceeds.

Casablanca Trust is required to maintain a minimum EBITDAR/dividend coverage of 1.35x for 2006-2007, with a floor of 1.50x thereafter. EBITDAR is defined as EBITDA plus rent under the lease agreement.

Elsewhere in Mexico, most structured finance players are staying deathly quiet on the issuance front until after the July 2 vote, while the two leading candidates for the Mexican presidency exchange barbs in a contest that’s turned increasingly venomous,. GMAC Financiera and GMAC Hipotecaria, however, decided to beat the ballot, jointly issuing a Ps800 million, two-tranche transaction.

The former put credits to housing finance companies into the collateral, while the latter provided bridge loans for construction. The A tranche, with a legal final of five years, priced at 104 basis points over 28-day TIIE. Fitch Ratings and Standard & Poor’s rated that piece AAA(mex)’ and mxAAA’ on their respective national scales. The B tranche, with a final of 5.5 years, priced at 235 basis points over. Ratings on that slice were A(mex)’ and mxA’, respectively. HSBC was sole lead. A broad array of investors bought into the deal, according to a source close to the transaction.

Meanwhile, Fitch has upped the rating of Mexican housing finance provider Metrofinanciera to A-(mex)’ from BBB+(mex).’ The agency cited the issuer’s increased financial flexibility as part of the impetus for the upgrade. Having traditionally relied on government agency Sociedad Hipotecaria Federal for much of its funding, Metrofinanciera has been diversifying its sources over the past few years.

The company has been active in placing short-term unsecured bonds in the domestic market and structured paper in both the domestic and cross-border markets.

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