Best Power Financing

Sep 25, 2013

Bond investors proved better placed to pick up construction risk for a Mexican power plant than bank lenders, opening the way for more infrastructure debt sales

México Generadora de Energía

México Generadora de Energía’s (MGE) sale of a 30-year project bond in November 2012 incorporated construction risk into a debt issue — a rare feat and one that contributes to the transaction’s significance.

The $575 million deal finances two 250 megawatt gas-fired power plants in Sonora, Mexico, and related infrastructure. The plants were 88% and 51% complete, with around 15 months of construction still to go, when the bond was sold.

Its greenfield risk, as well as the bond’s smooth execution, put the transaction ahead of others under consideration for the category. These...

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