CFE Sets New Mexico Loan Benchmark

Mexico’s Comision Federal de Electricidad (CFE) is paying 40bp over Libor on a $2bn 3-year senior revolving facility, well wide to the 25bp the borrower is heard to have sought last year. Fees of 30bp on $100m MLA tickets and 35bp on $150m senior MLA tickets are also heard from people familiar with the terms. The pricing is a new Mexico high grade benchmark and looks more in line with the market reality – cost of funds have gone up – and on an all-in basis, the issuer will secure a decent deal, given the movement in Libor. However, some still see it on a pure margin basis. “They are definitely paying a premium,” says one banker away from the deal. The BBB+ state-owned utility secured BBVA, RBS, BNP and Santander as bookrunners, and Citi is heard participating in a senior role. Most of the proceeds are being used to refinance bank debt, some of which matures at the end of the year. In November, CFE priced MXP1.2bn in local 2017 bonds at 30bp over Cetes. Other Mexican syndications are waiting in the pipeline to follow this one, now that the price target has been set.