Mexican RMBS Stays 'Resilient' Despite Downgrades: Fitch
Fitch Ratings updated its report on Mexican residential mortgage-backed securities (RMBS) based on performance data as of July 31. Akin to the effect of unemployment on US RMBS performance, the economic slowdown and unemployment landscape in Mexico continues to affect RMBS, the ratings agency said. Despite the hardship, 70% of the more than 80 Mexican RMBS Fitch rates retains original ratings. "While collateral performance has deteriorated, Fitch believes the capital structures for many of the transactions remain resilient," Fitch said in a statement. Fitch downgraded 21 RMBS-related tranches and two bonds backed by RMBS so far during 2009. Four tranches remain on Fitch's rating watch negative. Fitch assigned rating outlooks to 71 Mexican RMBS tranches, 46 of which received a stable outlook and 25 of which received a negative outlook. Certain factors affect the performance, including vintage, Fitch said. Older vintages outperform '07 and '08 vintages, for example. Loan-to-value (LTV) is another major determiner of payment behavior, Fitch said, indicating loans with original LTV (OLTV) lower than 60% perform nearly four times better than those with OLTV greater than 80%. Those with 60% or lower OLTV experience a 1.59% delinquency rate 180 days plus past due, compared with a 6.22% delinquency rate among loans with OLTV greater than 80%. Write to Diana Golobay.