In Mexico, securitizations are done via trusts to protect against bankruptcy. Financial institutions manage them. They must comply with data protection laws and notify debtors. Credit ratings are vital to evaluate assets.
Which forms can special purpose vehicles take in a securitisation transaction?
In Mexico, securitisations are conducted almost exclusively through special purpose vehicles (SPVs) formed as trusts. Trusts are the preferred structure due to their proven bankruptcy-remoteness – assets transferred into the trust are legally segregated from the originator’s estate, enhancing credit quality and investor protection. If properly structured, this isolation ensures that the securitised assets remain shielded from the originator’s insolvency risks.
Under Mexican law, trusts can often be structured so that the income derived from the securitised assets is not taxed at the trust level. Instead, the tax burden may 'flow through' to the beneficiaries or the originator, depending on how the trust is set up and who holds the economic rights. However, the specifics of achieving tax transparency and any related benefits depend heavily on the particular features of the transaction, the tax profile of the parties involved and compliance with certain legal and tax requirements. For instance, it may be necessary for the originator or certain beneficiaries to retain residual or subordinated interests, or to meet other conditions under the Mexican tax code and related regulations.
While it is theoretically possible to employ corporate SPVs, they are uncommon for securitisations in Mexico. Trusts offer a flexible legal framework, minimal regulatory hurdles, clear asset isolation features and a track record of acceptance by investors, trustees, regulators and rating agencies. As a result, the trust-based securitisation model has become the near-universal standard in the Mexican market.
SPV formation process
What is involved in forming the different types of SPVs in your jurisdiction?
Most securitisations in Mexico use trust structures as their SPVs. Establishing a securitisation trust involves drafting and negotiating a detailed trust agreement, appointing a licensed financial institution as trustee and transferring the securitised assets into the trust’s estate. The process typically takes several weeks, reflecting the time required for due diligence, know-your-customer (KYC) checks and careful review of the transaction documents. Costs vary based on trustee fees, legal expenses and, for public deals, underwriting and listing costs.
While less common, SPVs can also be formed as corporations. Incorporation requires obtaining a corporate name from the ministry of economy, executing articles of incorporation before a notary public, registering the company with the public registry of commerce, securing a tax identification number and completing other formalities. This process may be completed in a matter of weeks, with costs including notarial fees, administrative charges, and any applicable capital markets expenses if the corporation issues publicly listed securities.
Governing law
Is it possible to stipulate which jurisdiction’s law applies to the assignment of receivables to the SPV?
Yes. Mexican law generally recognises the principle of party autonomy, allowing the relevant parties to select the law governing their contractual relationships, including the assignment of receivables to an SPV. However, the practical enforceability of that choice depends on several factors, particularly the location and nature of the underlying assets.
If the receivables or collateral are situated in Mexico, the effectiveness of their assignment and any related security interests will typically be subject to Mexican law, regardless of the governing law chosen by the parties. For instance, mortgages and other real estate-related assets generally must be governed by the law of the jurisdiction where the property is located. Even for non-real estate receivables, while the parties may designate a foreign governing law, Mexican courts will only recognise and enforce it if it does not contravene Mexican public policy and meets certain formal and procedural requirements.
In practice, many securitisations involving Mexican assets are structured under Mexican law to streamline enforcement and ensure the transaction’s legitimacy before Mexican authorities.
Asset acquisition and transfer
May an SPV acquire new assets or transfer its assets after issuance of its securities? Under what conditions?
Yes. Whether an SPV can acquire new assets or transfer existing assets after the issuance of securities depends primarily on the terms set forth in the transaction documents. These documents may permit replenishments, substitutions or disposals, subject to certain conditions designed to preserve the credit quality and structural integrity of the securitisation. Key conditions often include the following.
Registration
What are the registration requirements for a securitisation?
Public securitisations in Mexico must be registered with the national securities registry and authorised by the national banking and securities commission. To obtain this registration, the issuer typically must submit a comprehensive package of documentation, including:
Private securitisation are not required to be registered with the national securities registry.
Obligor notification
Must obligors be informed of the securitisation? How is notification effected?
In most cases, notifying the obligors of a securitisation may be necessary to ensure that the SPV has the right to collect payments directly from the obligors. This may be particularly relevant if the receivables being securitised are contractual receivables as opposed to other types of receivables such as trade receivables or consumer loans. Transaction documents may include provisions requiring notification to obligors or setting out the obligations of the originator or servicer with respect to informing obligors of the assignment.
The general rule set forth by Mexican law regarding the notice of receivables may vary depending on the transfer method used, as follows:
Notwithstanding the foregoing, it is important to bear in mind that the relevant receivable documents may set out the process for serving notice to the obligors thereof, in which case such specific requirements must be complied with for the purpose of enforceability regarding the relevant obligors.
What confidentiality and data protection measures are required to protect obligors in a securitisation? Is waiver of confidentiality possible?
In Mexico, securitisations are subject to data protection regulations that protect the personal data of obligors and other individuals involved in the transaction. Any processing of personal data must comply with the provisions of the federal law on protection of personal data held by private parties, which regulates the collection, use, disclosure, storage and other processing of personal data by private entities.
As a general rule, personal data must be collected and processed only with the consent of the data subject and must be used only for the purposes for which it was collected. Personal data must also be kept confidential and secure, and appropriate measures must be taken to prevent unauthorised access or disclosure.
A waiver of confidentiality is possible if it meets all applicable legal requirements. Such a waiver must be voluntary, informed and granted by the data subjects themselves. They must be made fully aware of the consequences of waiving their rights, including the potential scope of data sharing. If a data subject later withdraws consent or revokes the waiver, the data controller is obliged to cease processing or sharing the affected data. In practice, securitisation participants must carefully design their documentation and consents to ensure compliance with these regulations, balancing the need for transparency and reporting in the transaction with the privacy rights of the underlying obligors.
Credit rating agencies
Are there any rules regulating the relationship between credit rating agencies and issuers? What factors do ratings agencies focus on when rating securitised issuances?
Yes. While Mexico does not have a dedicated statute solely governing the relationship between credit rating agencies and issuers, rating agencies are regulated under The securities market law and related provisions. These rules seek to prevent conflicts of interest and ensure the independence of rating agencies. For example, rating agency officers, directors or controlling shareholders may not hold shares in, or enter into contracts with, issuers they rate if such relationships could compromise the impartiality of their assessments. When rating securitised issuances, agencies typically focus on:
Directors’ and officers’ duties
What are the chief duties of directors and officers of SPVs? Must they be independent of the originator and owner of the SPV?
In Mexican securitisations, where trusts are the predominant SPV structure, the trustee, typically a regulated financial institution, assumes a fiduciary role. The trustee’s primary duties include safeguarding the securitised assets, distributing cash flows to investors according to the transaction documents and ensuring compliance with applicable laws, regulations and the terms of the trust agreement. This involves diligently following the instructions set forth in the offering materials and maintaining the integrity of the asset pool.
In many trust-based securitisations, one or more committees (often referred to as technical committees or investor committees) may be appointed. These committees typically comprise representatives of the investors, and sometimes independent members, who provide oversight, advice and decision-making support to the trustee. Their main responsibilities may include reviewing asset performance, approving modifications to the asset portfolio and guiding the trustee in resolving issues that arise during the life of the transaction.
While Mexican law does not mandate formal independence requirements for trustees, directors, officers or committee members from the originator or SPV owner, market expectations and investors generally encourage robust governance measures.
Risk exposure
Are there regulations requiring originators and arrangers to retain some exposure to risk in a securitisation?
No, Mexican law does not impose a formal risk retention requirement (commonly known as 'skin-in-the-game') on originators or arrangers of securitisations. Nevertheless, market practice often encourages originators to maintain some alignment of interests with investors. Originators may be obliged to provide credit enhancements such as corporate guarantees, credit insurance policies or over-collateralisation.
Which forms can special purpose vehicles take in a securitisation transaction?
In Mexico, securitisations are conducted almost exclusively through special purpose vehicles (SPVs) formed as trusts. Trusts are the preferred structure due to their proven bankruptcy-remoteness – assets transferred into the trust are legally segregated from the originator’s estate, enhancing credit quality and investor protection. If properly structured, this isolation ensures that the securitised assets remain shielded from the originator’s insolvency risks.
Under Mexican law, trusts can often be structured so that the income derived from the securitised assets is not taxed at the trust level. Instead, the tax burden may 'flow through' to the beneficiaries or the originator, depending on how the trust is set up and who holds the economic rights. However, the specifics of achieving tax transparency and any related benefits depend heavily on the particular features of the transaction, the tax profile of the parties involved and compliance with certain legal and tax requirements. For instance, it may be necessary for the originator or certain beneficiaries to retain residual or subordinated interests, or to meet other conditions under the Mexican tax code and related regulations.
While it is theoretically possible to employ corporate SPVs, they are uncommon for securitisations in Mexico. Trusts offer a flexible legal framework, minimal regulatory hurdles, clear asset isolation features and a track record of acceptance by investors, trustees, regulators and rating agencies. As a result, the trust-based securitisation model has become the near-universal standard in the Mexican market.
SPV formation process
What is involved in forming the different types of SPVs in your jurisdiction?
Most securitisations in Mexico use trust structures as their SPVs. Establishing a securitisation trust involves drafting and negotiating a detailed trust agreement, appointing a licensed financial institution as trustee and transferring the securitised assets into the trust’s estate. The process typically takes several weeks, reflecting the time required for due diligence, know-your-customer (KYC) checks and careful review of the transaction documents. Costs vary based on trustee fees, legal expenses and, for public deals, underwriting and listing costs.
While less common, SPVs can also be formed as corporations. Incorporation requires obtaining a corporate name from the ministry of economy, executing articles of incorporation before a notary public, registering the company with the public registry of commerce, securing a tax identification number and completing other formalities. This process may be completed in a matter of weeks, with costs including notarial fees, administrative charges, and any applicable capital markets expenses if the corporation issues publicly listed securities.
Governing law
Is it possible to stipulate which jurisdiction’s law applies to the assignment of receivables to the SPV?
Yes. Mexican law generally recognises the principle of party autonomy, allowing the relevant parties to select the law governing their contractual relationships, including the assignment of receivables to an SPV. However, the practical enforceability of that choice depends on several factors, particularly the location and nature of the underlying assets.
If the receivables or collateral are situated in Mexico, the effectiveness of their assignment and any related security interests will typically be subject to Mexican law, regardless of the governing law chosen by the parties. For instance, mortgages and other real estate-related assets generally must be governed by the law of the jurisdiction where the property is located. Even for non-real estate receivables, while the parties may designate a foreign governing law, Mexican courts will only recognise and enforce it if it does not contravene Mexican public policy and meets certain formal and procedural requirements.
In practice, many securitisations involving Mexican assets are structured under Mexican law to streamline enforcement and ensure the transaction’s legitimacy before Mexican authorities.
Asset acquisition and transfer
May an SPV acquire new assets or transfer its assets after issuance of its securities? Under what conditions?
Yes. Whether an SPV can acquire new assets or transfer existing assets after the issuance of securities depends primarily on the terms set forth in the transaction documents. These documents may permit replenishments, substitutions or disposals, subject to certain conditions designed to preserve the credit quality and structural integrity of the securitisation. Key conditions often include the following.
Registration
What are the registration requirements for a securitisation?
Public securitisations in Mexico must be registered with the national securities registry and authorised by the national banking and securities commission. To obtain this registration, the issuer typically must submit a comprehensive package of documentation, including:
Private securitisation are not required to be registered with the national securities registry.
Obligor notification
Must obligors be informed of the securitisation? How is notification effected?
In most cases, notifying the obligors of a securitisation may be necessary to ensure that the SPV has the right to collect payments directly from the obligors. This may be particularly relevant if the receivables being securitised are contractual receivables as opposed to other types of receivables such as trade receivables or consumer loans. Transaction documents may include provisions requiring notification to obligors or setting out the obligations of the originator or servicer with respect to informing obligors of the assignment.
The general rule set forth by Mexican law regarding the notice of receivables may vary depending on the transfer method used, as follows:
Notwithstanding the foregoing, it is important to bear in mind that the relevant receivable documents may set out the process for serving notice to the obligors thereof, in which case such specific requirements must be complied with for the purpose of enforceability regarding the relevant obligors.
What confidentiality and data protection measures are required to protect obligors in a securitisation? Is waiver of confidentiality possible?
In Mexico, securitisations are subject to data protection regulations that protect the personal data of obligors and other individuals involved in the transaction. Any processing of personal data must comply with the provisions of the federal law on protection of personal data held by private parties, which regulates the collection, use, disclosure, storage and other processing of personal data by private entities.
As a general rule, personal data must be collected and processed only with the consent of the data subject and must be used only for the purposes for which it was collected. Personal data must also be kept confidential and secure, and appropriate measures must be taken to prevent unauthorised access or disclosure.
A waiver of confidentiality is possible if it meets all applicable legal requirements. Such a waiver must be voluntary, informed and granted by the data subjects themselves. They must be made fully aware of the consequences of waiving their rights, including the potential scope of data sharing. If a data subject later withdraws consent or revokes the waiver, the data controller is obliged to cease processing or sharing the affected data. In practice, securitisation participants must carefully design their documentation and consents to ensure compliance with these regulations, balancing the need for transparency and reporting in the transaction with the privacy rights of the underlying obligors.
Credit rating agencies
Are there any rules regulating the relationship between credit rating agencies and issuers? What factors do ratings agencies focus on when rating securitised issuances?
Yes. While Mexico does not have a dedicated statute solely governing the relationship between credit rating agencies and issuers, rating agencies are regulated under The securities market law and related provisions. These rules seek to prevent conflicts of interest and ensure the independence of rating agencies. For example, rating agency officers, directors or controlling shareholders may not hold shares in, or enter into contracts with, issuers they rate if such relationships could compromise the impartiality of their assessments. When rating securitised issuances, agencies typically focus on:
Directors’ and officers’ duties
What are the chief duties of directors and officers of SPVs? Must they be independent of the originator and owner of the SPV?
In Mexican securitisations, where trusts are the predominant SPV structure, the trustee, typically a regulated financial institution, assumes a fiduciary role. The trustee’s primary duties include safeguarding the securitised assets, distributing cash flows to investors according to the transaction documents and ensuring compliance with applicable laws, regulations and the terms of the trust agreement. This involves diligently following the instructions set forth in the offering materials and maintaining the integrity of the asset pool.
In many trust-based securitisations, one or more committees (often referred to as technical committees or investor committees) may be appointed. These committees typically comprise representatives of the investors, and sometimes independent members, who provide oversight, advice and decision-making support to the trustee. Their main responsibilities may include reviewing asset performance, approving modifications to the asset portfolio and guiding the trustee in resolving issues that arise during the life of the transaction.
While Mexican law does not mandate formal independence requirements for trustees, directors, officers or committee members from the originator or SPV owner, market expectations and investors generally encourage robust governance measures.
Risk exposure
Are there regulations requiring originators and arrangers to retain some exposure to risk in a securitisation?
No, Mexican law does not impose a formal risk retention requirement (commonly known as 'skin-in-the-game') on originators or arrangers of securitisations. Nevertheless, market practice often encourages originators to maintain some alignment of interests with investors. Originators may be obliged to provide credit enhancements such as corporate guarantees, credit insurance policies or over-collateralisation.
