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Announcement:

Moody's Assigns a Provisional Rating of (P)Aaa.mx to Metrofinanciera's Mortgage Backed Securities, MTROCB 06U

 The document has been translated in other languages

29 Aug 2006
Moody's Assigns a Provisional Rating of (P)Aaa.mx to Metrofinanciera's Mortgage Backed Securities, MTROCB 06U

Mexico City, August 29, 2006 -- Moody's de Mexico S.A. de C.V. ("Moody's") has assigned a provisional rating of (P)Aaa.mx (Mexican National Scale) and (P)Baa1 (Global Scale, Local Currency) to Metrofinanciera's mortgage backed securities; Certificados Bursatiles Fiduciarios Preferentes MTROCB 06U. The certificates will be issued by ABN AMRO Bank (Mexico), S.A., in its capacity as trustee. According to Metrofinanciera, although the certificates will be issued locally and denominated in local currency (UDIs), part of the issuance is expected to be placed in the international capital markets through rule 144a private placement. This is the first time that Metrofinanciera will offer mortgage backed securities in the cross border markets.

Interest and principal to certificate holders will be primarily payable with cash flow from low-income mortgage loans originated by Metrofinanciera, S.A. de C.V., Sociedad Financiera de Objeto Limitado ("Metrofinanciera") and assigned to the MTROCB06U trust, which will be established under the laws of Mexico.

The provisional ratings are primarily based upon the following: (a) an initial credit enhancement of 2.5% in the form of overcollateralization, (b) target overcollateralization of 9.5% of the outstanding balance of the pool (c) overcollateralization floor equal to 0.5% of the original collateral balance, (d) first loss mortgage insurance from Sociedad Hipotecaria Federal (SHF), (e) an expected coupon on the certificates of 5.3%, (f) the mortgage origination standards of Metrofinanciera, (g) the capability of Metrofinanciera in its role as a servicer, and (h) the well-established Mexican laws governing mortgage loan securitization.

SECURITIZED MORTGAGE POOL

The loans that will be securitized are denominated in UDIs (inflation-linked investment units), are fixed-rate, and have first-lien mortgages on social-interest properties located in Mexico. The portfolio reviewed by Moody's is comprised of 3,268 mortgage loans with an aggregate outstanding principal balance of approximately UDIs 303 million as of August 1st, 2006 (cut-off date). The mortgage pool has a weighted average current loan-to-value (LTV) of 86% and weighted average debt-to-income (DTI) of 17.5%. As of the cut-off date, 8.5% of the outstanding balance of the pool is up to 30 days delinquent and 1.2% is delinquent from 31 to 60 days. With a weighted average seasoning of 17 months, the pool is less seasoned than pools in previous Metrofinanciera transactions.

The analyzed pool includes 26 loans (0.5% of the pool balance) originated through INFONAVIT's co-financing program. These co-financed loans are originated jointly by Metrofinanciera and INFONAVIT, a quasi-governmental Mexican housing fund. Only Metrofinanciera's portion of the co-financed loans (not INFONAVIT's) will be transferred to the trust. It is Moody's understanding that with respect to the co-financed loans, the MTROCB 06U trust will share the first-priority interest on the property with INFONAVIT. In case of default, liquidation proceeds net of foreclosure and liquidation expenses are expected to be distributed between the trust and INFONAVIT. The MTROCB 06U trust is expected to receive a pro-rata share of the net liquidation proceeds based on the outstanding principal balance of the Metrofinanciera-originated mortgage loan at the time of default.

SHF PROVIDES MORTGAGE INSURANCE

SHF (issuer rating of Baa1 on the Global Scale, Local Currency, and Aaa.mx on the Mexican National Scale) will provide first-loss mortgage insurance (MI) that covers the outstanding principal balance of each loan that defaults plus unpaid and accrued interest. MI claims can be made to SHF once the trust obtains a favorable court ruling during the foreclosure process. The MI coverage percentage is determined for each loan so that the sum of MI coverage percentage plus the percentage of down payment paid by the borrower on the mortgage add up to 35%. The weighted average MI coverage on the mortgage pool is expected to be around 25%. MI is expected to improve recoveries on defaulted loans and thus helps reduce the expected loss that Moody's assumes on the mortgage pool.

STRUCTURE

MTROCB 06U senior certificates will also be denominated in UDIs and have a fixed interest rate. The senior certificates will constitute 97.5% of the issuance balance and the overcollateralization will account for the remaining 2.5%.

MTROCB 06U senior certificates will have a target overcollateralization level of 9.5% of the outstanding collateral balance. Whenever the overcollateralization (OC) level is below the target or below the OC floor of 0.50% of the initial collateral balance, all excess spread will be used to amortize the senior certificates until the target level is reached again. Mortgage loans up to 180 days delinquent will be considered when calculating the OC percentage.

RATING ACTION

The complete rating action is as follows:

Issuer: ABN AMRO Bank (Mexico), S.A., Institución de Banca Múltiple, División Fiduciaria, acting solely as trustee.

Certificados Bursatiles Fiduciarios Preferentes for up to UDI 295 million (approximately MXP$ 1,116 million) rated (P)Aaa.mx (Mexican National Scale) and (P)Baa1 (Global Scale, Local Currency)

More details about the transaction will be published in Moody's upcoming Pre-Sale Report on this transaction which will be available on Moody's website, http://www.moodys.com.

New York
Susan Knapp
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Carlos Benavides
Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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