Pedro Zorrilla
Deputy Director General of Corporate Services and Institutional Relations
Mexican Stock Exchange
View from the Top

Mexican Stock Exchange Keen on Starting Automotive Listings

Mon, 09/01/2014 - 12:44

Q: How much of a priority is the automotive sector for the Mexican Stock Exchange?

A: The Mexican Stock Exchange (BMV) has several underrepresented sectors. The biggest absence is the oil and energy sector. Fortunately, the IPO of IEnova was successful, and the Energy Reform will open new opportunities for companies developing in these sectors to use the BMV as a means of finance and to diversify capital and debt sources. Another sector that is under-represented is the financial sector, although this has changed since Santander listed its Mexican subsidiary in 2012. We do have a few listed conglomerates that have some automotive activities, mainly in the auto parts sector. The automotive sector has gained dynamism and representation in the domestic debt market. We are seeing the rise of direct issuers devoted to the automotive industry, namely the financial companies of OEMs that are becoming very active funding their activities in the debt market. The fact that financial service companies of OEMs are becoming active participants in the debt market is a very positive sign. We would welcome these issuers or the local operations of OEMs listing in the equity market. However, automakers are huge international companies, mostly already listed in their home markets. In today’s world, it is less necessary to do multiple listings. Nevertheless, a listing with BMV would definitely add a lot of value to the companies themselves.

Q: How have you been working with OEM financial services companies?

A: The Stock Exchange works more to provide financial services and instruments to fund the activities of OEM’s financing arms. These companies know the market for automotive financing and have been growing rapidly. They have been filling a gap as banks were not previously giving full coverage to this type of financing, although their success has begun to have an influence on the banks autoloans activity. The BMV helps by creating an open and deep market for these participants to fund their activities here.

Q: How has the relationship between the BMV and automotive financial services companies been affected by Certificados Bursátiles (Securities Market Certificates)?

A: Our relationship with auto makers and their financial companies is recent. These ties have been strengthened as financial issuances have grown importantly over the last five years. The stock exchange’s Securities Market Certificates were created in 2001, designed to be a very flexible and efficient instrument for accessing the debt market. This flexibility facilitates individual issues, as well as issuance programs by companies. The certificates allow a company to make several issuances under a single program, accessing the market when the company needs the financial resources, and determining the specifics of the issuance as to its maturity, interest rate, amortization schedule, and reference currency. The certificates are also efficient as they are easier and less expensive to manage legally. Today, most of the issuances in bonds and in the debt market are structured by these certificates. The Securities Market Certificates have been a very successful instrument for fulfilling the needs of companies, and for structured financing in the Mexican debt market. The automotive sector has been among the prime beneficiaries of this instrument.