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Using Financial Instruments to Bridge Infra Gap

José-Oriol Bosch - BMV Group


Mon, 11/05/2018 - 11:32

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Q: How can the BMV help to bridge Mexico’s infrastructure gap?
A: The BMV has already helped a great deal as there are many infrastructure companies that are listed on the stock exchange. We also have companies financing themselves 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 about MX$170 billion. Of this, infrastructure represents about 30 percent, both in the number of issues and in value.
Fibras were first raised in real estate in 2011, and the 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 one 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 last year we created the first Special Purpose Acquisition Corporation (SPAC), which is very common in other markets.
Q: Given that GACM recently raised a Fibra E on the BMV, what will be the implications of the elections on this?
A: The Fibra E was created in 2015 for financing of energy and infrastructure projects. There have been some Fibras since then but the most recent was that of the airport on March 26, 2018. The airport is a large, long-term project so I trust the infrastructure plans would not change with different administrations. It is clear to anyone who has traveled through the current airport that the people of Mexico need the NAIM project.
Q: Why has there been such a lack of demand for CerPIs compared to other products?
A: In comparison to the Fibra, which was a new asset class, the CerPI is a product that is similar to the 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 begin seeing more demand. It was the same story as the 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.
Q: What are the implications of the new BIVA stock exchange for your strategy?
A: We are not yet sure what the BIVA’s strategy will be so I cannot comment much on that. However, we hope that the strategy will involve developing the trading market as it has great potential. If, instead of focusing on growing the market, it cannibalizes itself, the market will be equally as small, or even smaller. And with two stock exchanges, this makes no sense.
Q: How can the International Quotation System (SIC) help to position international companies in Mexico?
A: The SIC is a system that caters to foreign companies that are operated in Mexico. There are approximately 1,500 shares listed on the SIC, and of these, half are stocks and half are ETFs. Within those shares, there are companies from different countries and different sectors. In terms of mining, we have companies from the US, Canada, the UK and Latin America listed on this index. This means any investor in Mexico can buy these shares. Rather than being listings, they can be seen more as a registry of international companies that allow Mexican investors to buy shares.
The SIC represents more than a third of the total volume of the BMV and the local exchange represents two-thirds. There is a lot 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.

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