Asset Securitization Report's Latin America Deal of the Year: Metrofinanciera

The region's top transaction was a bundle of firsts: a debut cross-border issue in its asset class sold into the capital markets; the first time Ambac wrapped a deal backed by Mexican existing assets in either the local or cross-border arena; the first time any monoline insurer wrapped a deal in Mexico's real estate sector; and an inaugural transaction for sole lead Dresdner Kleinwort Wasserstein, which hadn't arranged any structured deals backed by Mexican assets prior to Metrofinanciera. Closing June 30, the tranches of Metrofinanciera Trust shared a nine-year final/ six-year average life maturity. The 2005-1 notes were sized at $150 million and priced at 36 basis points over three- month Libor, thanks to the Ambac wrap. Fitch Ratings, Moody's Investors Service, and Standard & Poor's rated the insured tranche AAA. The 2005-2 notes came to $60 million and priced at 167 basis points over three-month Libor, with ratings of BBB/Baa1/BBB+ from Fitch, Moody's and S&P, respectively. As is the case with first-time deals, the structuring process was a bumpy road for Dresdner. To mitigate currency risk - the collateral, after all, is denominated in pesos - the arranger had to attach a swap to the transaction. While the swap provider, Dresdner Switzerland, was an in-house entity, it still had to be persuaded. The main sticking point was the maturity of the cross-border swap, which ended up covering the full length of the deal, sources said. Liquidity in the peso-dollar swap market thins out beyond three years and anything beyond five years is a tough sell.