Standard & Poor's Ratings Services recently released its first Mexican residential mortgage-backed securities (RMBS) index report. The index illustrates the market's strong issuance and stable performance from January 2003 to July 2007. During 2006, the amount of RMBS issued exceeded 18.5 billion Mexican pesos, which represented 193% growth over 2005. This trend continued in the first half of 2007, and issuance has already surpassed 2006's total. This is remarkable growth for mortgage securitization, and a host of factors are propelling it: domestic and international investors' growing appetite for Mexican securities, commercial banks' entrance into the market, the Mexican economy's stability, the country's strong housing demand, and the new government housing programs.
Despite these positive signals, it's still possible that the U.S. subprime mortgage situation and the added volatility in the global RMBS market could cut into future issuance of Mexican RMBS. Nevertheless, Mexican RMBS has outperformed the market's expectations to date. Overall, the index's three main performance variables--delinquencies, defaults, and prepayments--are showing a stable pace for the Mexican RMBS market. Standard & Poor's believes that this stability will continue, sparking further interest from local and international investors.
