José-Oriol Bosch
View from the Top

Enabling Access to Capital and Debt Markets

Tue, 04/03/2018 - 17:23

Q: How has BMV Group protected itself against external shocks?

A: Companies listed on the BMV are so diversified in terms of sectors, sizes and business segments that the impact of geopolitical uncertainty has been much less intense in Mexico. I think Mexico, just like Canada and the US, needs to see the renegotiation of NAFTA and the subsequent signing of USMCA as an opportunity to turn to other markets. Mexico does not only have North America as a potential market; it has a great number of free-trade agreements with other countries, even though the majority of trade is focused on the North American region.

Q: How can the International Quotation System (SIC) help to position international companies in Mexico?

A: SIC caters to foreign companies that operate in Mexico. There are over 1,500 foreign securities listed on SIC from different countries and sectors. Of these, approximately half are stocks and half are ETFs. In terms of mining, companies from the US, Canada, the UK and from Latin America are listed on this index. This means any investor in Mexico can buy these shares. Rather than listings, they can be seen more as a registry of international companies that allows Mexican investors to buy shares.
SIC represents more than a third of the total volume of the BMV, with the local exchange representing the remaining two-thirds. There is a great deal of interest because a Mexican investor can buy shares in an international company, pay in pesos and sell in pesos, while maintaining a fiscal advantage compared to buying the shares in Canada directly.

Q: What should the secondary regulation of the Fintech Act include so innovation in the sector is not compromised?

A: The goal of the Fintech regulation is to add value. It needs to define market value and how it will develop and grow. Fintech sounds very nice but obtaining the financing for it is not so simple. We have been talking with those companies because they want to obtain funding to grow through the BMV. We are having this same conversation with various sectors that do not have access to financing or that have trouble finding it.

Q: How can BMV Group help to bridge Mexico’s infrastructure gap?

A: BMV Group has already helped, considering there are many infrastructure companies listed on the exchange. We also have companies accessing financing through debt and these are the most traditional instruments in the market. In 2009, CKDs were created and since then around 100 issues have raised close to MX$170 billion (US$8.85 billion). Of this, infrastructure represents about 30 percent.
Fibras were first raised in real estate in 2011 and their numbers continue growing. We are looking at new Fibras and we are about to raise a Fibra in the education sector, which will be the first of its kind. Also, Fibra Es were created in 2015 and the first infrastructure Fibra E was raised by Pinfra in 2016. Since then, we have had various infrastructure Fibra Es, the latest being that of GACM, as well as a first Fibra E on the energy side issued by CFE. We have a range of products for the industry to choose from and in 2017 we created the first Special Purpose Acquisition Corporation (SPAC), which is very common in other markets.

Q: Why has there been such a lack of demand for CerPIs compared to other products?

A: In comparison to Fibras, which were a new asset class, CerPI is a product similar to CKDs but with some different management rules, including the role played by the administrator. We had the first CerPI issued in real estate and I think now we will start to see much more demand for the product. There are already various CerPIs that will be launched in the coming months. It is always difficult to be the first but now that the first CerPI has been successful, the door has been opened and we will see more demand. It was the same story with Fibras – the first real estate Fibra was raised by FUNO in 2011 and it was extremely complex but it was more easily understood after the first issuance.