CFE Places Sustainable-Focused Bonds in the BMV

CFE reported that it allocated bonds to the Mexican Stock Exchange (BMV) worth MX$10 billion (US$516.31 million) with a focus on Environmental, Social and Governance (ESG) criteria. The trade reached a demand of MX$20 billion (US$1.03 billion), two times the contractual amount and 2.5 times the expected amount of MX$8 billion (US$413 million). The placement has the highest investment grade rating on the AAA local scale, issued by the credit risk assessment agencies Moody's and Fitch. The underwriters were BBVA, Banorte, Citibanamex and Santander. Santander acted as an ESG structuring agent, too.

The operation comprised four sections: one in a variable format, another in a nominal fixed rate and two in a Mexican Investment Rate Unit (UDIs) format. The first two featured a social approach to finance projects and subsidize basic services. The other two sections have a green approach to promote investment in renewable energy projects, energy efficiency, electro-mobility and ecological buildings, in line with the Reference Framework for Sustainable Financing of the State Productive Company (EPE).

CFE is the first in the local public debt market to place a bond with a 20-year duration. Added to the high demand, this is proof of the trust investors have in the state utility, said CFE. The company also said that the resources obtained from the move will allow it to pay off short-term debt. CFE added that this event will extend the maturity profile of the company's debt and strengthen its commitment to financial discipline. Furthermore, this strategy will enable it to improve financial results and optimize the use of productive assets.

“The issuance was executed after holding different virtual Roadshow meetings with more than 20 local and international investors, such as fund administrators, brokerage firms, treasuries, investment funds, insurers, private banks and development banks, among others,” reported CFE.

CFE’s stock market news comes off the back of Mexico’s grand promises at COP27, which include a reduction in gas emissions of 35 percent by 2030. According to Marcelo Ebrard, Mexico’s Foreign Minister, Mexico must double its renewable energy capacity, developing a further 30GW, over the next eight years to achieve this goal. Mexico also presented its Sonora Plan, an ambitious project for the construction of new renewable power plants that will increase Mexico’s current clean power capacity by 5GW. Nevertheless, the country has been criticized for undermining private investment to develop renewable energy in the country, which has brought up friction with its USMCA partners.