Cleary on $1.49bn FIEMEX bond offering
Cleary Gottlieb has advised Fideicomiso de Inversión en Energía México (FIEMEX), a special purpose trust sponsored by Mexico’s National Infrastructure Fund and managed by Mexico Infrastructure Partners (MIP), on its historic USD $1.49bn bond offering in the international capital markets.
The transaction consisted of the issuance of USD $1.49 billion in 7.250% senior secured notes due 2041, offered for sale in the US pursuant to Rule 144A and abroad pursuant to Regulation S.
FIEMEX intends to use a portion of the net proceeds to repay and cancel an existing bridge loan facility incurred to finance its USD $6.2 billion acquisition of 12 combined cycle gas turbine plants and a wind farm from Iberdrola.
The offering is the largest single tranche project finance bond issue in the Mexican energy sector and one of the largest project bond issues in Latin America to date.
The offering was also part of a complex acquisition financing strategy implemented in close coordination with the Mexican Ministry of Finance and Public Credit and demonstrates the Mexican government’s strategic use of private capital to support public policy objectives, particularly in strengthening the national energy sector. The offering received an investment grade rating from all three major rating agencies, underscoring the market’s confidence in the financing structure and in Mexico in general.
The transaction was launched on 3 September, priced on 10 September and closed on 18 September. Barclays, BBVA, Santander and SMBC acted as global coordinators and joint bookrunners and BNP Paribas and Scotiabank participated as joint bookrunners.
The notes are secured by FIEMEX’s power plants, including the real estate where they are located, the ancillary equipment, as well as the cash flows generated by them. The security documents include a sophisticated waterfall structure to allocate cash flows to service the debt, fund reserves and contribute to the operating and capital expenditures of FIEMEX’s plants.
MIP is the largest infrastructure and energy fund manager in Latin America, with approximately $11 billion in assets under management.
FIEMEX operates the second largest power generation platform in Mexico after the state-owned Comisión Federal de Electricidad, with a combined total installed capacity of 8.5 GWs representing 9.5% of the market share in the Mexican electricity market.
Cleary’s corporate team included partners Jorge Juantorena (pictured left) and Manuel Silva (pictured right), associates Jose Andres de Saro and Alejandro Martínez-Inzunza, and international lawyer Jose Eduardo Coronado. Partner Matthew Brigham and associates Victoria Ju and Mingyu Tang advised on U.S. tax matters. Partner Chase Kaniecki, senior attorney James Corsiglia, and associate Samuel Chang advised on U.S. sanctions and anticorruption matters. All lawyers are based in New York, except for Chase Kaniecki and Samuel Chang who are based in Washington, D.C.
