DALLAS -- Wall Street has sold its first Mexican infrastructure bonds, but underwriters say it may be 1993 before much of the rest of the estimated $10 billion in toll road financings comes to market.

Lehman Brothers International last month privately placed $207.5 million of bonds to finance the planned Mexico City-Toluca toll road. The deal was sold globally under the Securities and Exchange Commission's Rule 144A.

"This was a first-of-its-kind bond and you have to work hard to create a market for these deals," a source close to the transaction said Tuesday. "The next three or four deals that are going to be done will be part of a slow process of building up an interest in these projects."

Investment bankers pursuing such deals predict only a few big municipal-style deals will close this year. Some point to continued delays by the Mexican government, while others say institutional investors are skittish about a softening economy and the likelihood the peso may soon be sharply devalued.

"The problem is that the overall policy in Mexico is tied to the pegged currency -- the overvalued peso," said Chris Whalen, director at Whalen Co., a Washington, D.C., consultant and publisher. "These projects generate peso revenues but are financed in dollars. There are not enough sectors in Mexico that are generating hard dollars."

Earlier this summer, the Mexican stock market, the Bolsa, slumped in the face of uncertainty about the prospects for a North American free trade agreement in this U.S. presidential election year.

Another indicator that the bonds may not hit the market before next year is the demand for the first portion of the program.

The source familiar with the transaction said that after a road show to international financial centers, the so-called Toll Revenue Indexed Participation Securities attracted strong interest from investors in the Euromarkets and Asia.

But the deal received less than expected demand from U.S. investors. The source attributed this to the presence in the market of a heavy slate of high-yield corporate deals offering better rates. The bonds have a final maturity in May 2002 and an average yield of 11.75%.

Other bankers say the slack response from American investors signals the capital market remains nervous about muni-style deals in a third world country still lacking an investment-grade rating.

"A lot of people are talking about opportunities in Mexico, but most people are waiting to put their money in," said a banker at a California-based firm pursuing infrastructure deals south of the border. "Once a free trade agreement is signed, I think that will change. But that could be a year away."

In the meantime, most interviewed believe the market will only see a few major Mexican infrastructure deals sold later this year. And they say these deals have already been in the works for over a year.

One such transaction is being handled by Dillon, Read & Co. A source said a $100 million toll road financing was nearing the final stages for offering when a quasi-Mexican government bank unexpectedly pulled part or all of its guarantee of the debt.

The source said Dillon Read is investigating alternative credit enhancements in Mexico and abroad in an effort to complete the deal so construction of the 220-kilometer leg of the Pan American highway can begin.

Ultimately, though, bankers say such projects will have to be sold without Mexico's backing.

"These projects have to be done without government gaurantees ultimately. That's the idea of this [privatization] program," said David Paul, managing director in the San Francisco office of Public Financial Management Inc., which has been hired to advise on some Mexican projects. "On a lot of these projects, the government is trying to come to grips with the fact that they have used up their internal liquidity."

Many projects are still being developed. Besides a $10 billion toll road program the government hopes to start by 1994, when President Carlos Salinas de Gortari leaves office, Mexico is expected to seek private capital to build as much as $50 billion in public projects in the coming years.

"There is still a lot to be done," said a Wall Street banker. "They don't have specifics on a lot of these transactions because they have not developed that far."

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