Peso Market's Power Bond

Jun 1, 2003

Mexico's electricity commission issues a bond backed by receivables from its corporate customers. The bond is the first unsecured asset-backed bond from a government entity.

Mexico's federal electricity commission, Comisión Federal de Electricidad (CFE) became the first public sector entity in Mexico to issue an unsecured asset-backed bond in the local market on April 25. The $210 million, peso-denominated certificados búrsatiles have a 279-day maturity and are structured as a revolving purchase of assets. ING (México) Casa de Bolsa structured, lead-managed and placed the bond with 24 institutional investors in Mexico. Eduardo Andrade, head of the Mexican Energy Association, says the bond, "is an important advance in the government's efforts to establish the peso market as a source of funds for infrastructure projects. If we can finance projects with pesos, Mexican projects will be less at risk from volatility in other markets." The Ministry of Energy estimates that Mexico needs 70% more generation capacity by 2010 for a cost of $74 billion.


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