In partnership with leading local broker IXE Casa de Bolsa
The Inter-American Development Bank will establish its first capital markets guarantee facility in Mexico to assist local corporations seeking access to Mexican institutional investors in order to issue domestic debt on more competitive terms.
The facility of up to 450 million Mexican UDIs (inflation-index units, equivalent to approximately US$180 million in August 2008) will be set up in partnership with IXE Casa de Bolsa, a leading arranger and placement agent of debt securities in the Mexican capital markets.
The new facility will provide credit enhancements to Mexican businesses, including financial companies and special purpose vehicles, to support the issuance of corporate debt and/or asset-backed securities ranging in face value from the Mexican peso equivalent of US$20 million and US$100 million.
“The IDB designed this program with a Mexican partner, IXE, because it will give us more opportunities to better serve local businesses seeking access to capital in a very dynamic domestic market,” said IDB project team leader Kelle Bevine.
“This multi-issuer, multi-use platform will allow us to support transactions in a more timely and cost-efficient way, building on IXE’s proactive origination efforts to penetrate key market segments,” she added.
The partial credit guarantees, which will be reimbursable in Mexican pesos, will help companies with credit ratings of at least mxBBB issue or place debt securities for tenors beyond three years and achieve greater access to local institutional investors, whose portfolios mostly hold government and corporate bonds rated at least mxAA.
Local institutional investors are a growing source of capital and liquidity in Mexico. Pension funds, mutual funds and insurance companies had US$155 billion under management at end-2006. These investors have shown strong appetite for diversifying into long-term corporate and structured domestic debt issues.
The IDB expects this program with IXE will promote the development of the Mexican capital markets by supporting new issuers, particularly among second-tier companies, enabling their access to financing on more competitive terms and conditions.
Source: Inter-American Development Bank, 03.09.2008
Filed under: Banking, Mexico, News, Services, BMV Bolsa Mexicana de Valores, Capital Markets, IXE, Latin America, Mexico
