CFE Renews Its Revolving Credit
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CFE Renews Its Revolving Credit

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Perla Velasco By Perla Velasco | Journalist and Industry Analyst - Fri, 01/13/2023 - 08:58

CFE reported that it successfully renewed its revolving syndicated credit for US$1.54 billion, 22.2 percent more than the previous credit line from 2018 granted through various banks. The credit arrangement was pursued as part of its Global Funding Proposal for Fiscal Year 2023, “with the aim of strengthening its operational and financial position in the short and medium term,” announced the company.

The credit was extended by three years with the option to extend it to five years. It also has an adjusted SOFR interest rate plus 115 basis points. “The resources may be used to develop the activities provided for in the CFE Law, as well as to achieve the objectives and goals established in the 2023-2027 Business Plan,” wrote CFE.

The transaction was backed by 16 international financial institutions, of which six are listed as joint leaders under the Joint Lead Arranger and Joint Bookrunner scheme: Bank of America, BBVA Mexico, BNP Paribas, Mizuho Bank LTD, Credit Agricole Corporate and Investment Banking as well as Sumitomo Mitsui Banking Corporation.

The press release indicated that during 1H23, the operation will move towards a sustainable funding scheme based on its performance indicators in environmental and social matters associated with the objectives for the 2023-2027 Business Plan. Moreover, CFE said that by complying with the metrics established to meet these goals, it will be able to reduce the financial cost of its corporate social responsibility (CSR).

Furthermore, Credit Agricole CIB will act as an administrative agent. CFE labeled the transaction as a vote of confidence from the national and international banks for the CFE administration.

As CFE looked back on its main achievements throughout 2022, it underlined president López Obrador’s instructions to avoid increasing tariffs beyond inflation levels. While by September 2022 inflation reached 8 percent, low consumption domestic rates increased by 5.9 percent, industrial rates by 6.3 percent and commercial rates by 5.9 percent.

Furthermore, according to Mexico Evalúa, the state company had received MX$79.3 billion (US$4.09 billion) to subsidize domestic electricity tariffs by the end of 3Q22. What is more, the Ministry of Finance and Public Credit (SHCP) announced that it has an MX$76.62 billion (US$3.9 billion) budget reserved to subsidize electricity during 2023. 

In addition, CFE shared that as of Dec. 31, 2021, CFE's total revenues amounted to MX$566.6 billion (US$29.6 billion), 12.7 percent more than at the end of 2020, while the losses reported in 3Q22 were proportionally lower than the increase in energy prices.

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