In a first step toward the creation of a secondary market for mortgages in Mexico, Bancomer is coming to market with a $50 million issue of mortgage-backed securities.

Bancomer spent two years putting the deal together-not including a hiatus during the Mexican debt crisis. It hopes to help create a secondary market that will spur mortgage lending by enabling lenders to move loans off their books.

The issuance, the first of its kind in Mexico, will help create liquidity and expand homeownership in Mexico, said Stuart A. Gabriel, deputy dean and professor of finance and business at the Marshall School of Business of the University of Southern California in Los Angeles. Because the primary and secondary markets in Mexico are not well developed, "there is an important lack of liquidity in those markets that has important implications for housing demand and development," he said.

Many banks in Mexico are trying to take assets off their balance sheets, and securitization is "a way of keeping out assets and taking out long-term funding," said Ursula Wilhelm, an associate director at Standard & Poor's in Mexico City who follows Latin American banks for the debt rating agency.

Luxury and subsistence-level housing are plentiful, but "there is a great need in Mexico for the development of housing and of homeownership opportunity for middle-income households," Mr. Gabriel said.

In Mexico, these new securities will be called "titulos respaldados por hipotecas," or mortgage-backed securities. After Bancomer was privatized in 1992, it began to emphasize consumer lending. It is one of the largest originators of mortgages in Mexico, with $4.7 billion of such loans on its books.

The pool of loans for securitization has "shown very good payment rates" even during the peak of the Mexican economic crisis and during periods of high interest rates, said Ms. Wilhelm.

"We were very cautious about the quality of the mortgages we were selling," a spokesman for Bancomer said.

The loans behind the securities are from Bancomer's middle-market residential mortgage program and have an average remaining term of roughly 23 years.

Mortgages valued at about $50 million will be sold to Nacional Financiera, a government-owned development bank serving as Bancomer's trustee for the transaction. Nacional Financiera is to issue the mortgage- backed securities as equity instruments through the Mexican Stock Exchange because of regulatory constraints. Senior tranches will be sold as bonds to the secondary market in the next two months when a favorable interest rate environment emerges in Mexico. The value of these tranches is about $44 million.

These participation certificates will get a domestic AAA rating from Standard & Poor's and Fitch-Clase.

Bear, Stearns & Co. was the structurer and calculation agent for the transaction.

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