09 July 2017 / Marco A. Sotomayor Melo

Project finance is a very common source of financing in Mexico, especially for projects in which the offtake agreements are entered into with governmental companies (or entities) such as the Federal Electricity Commission (CFE) or Petróleos Mexicanos (Pemex). Due to reforms approved recently, the most popular and relevant sectors in recent years have been the energy sector (hydrocarbons and electricity) and telecoms, which have created a lot of expectation among investors. There is a significant trend related to the bidding processes of mature oil fields for E&P, power plants, and pipelines. We expect that the infrastructure sector will grow exponentially, since the Mexican government is encouraging the participation of the private sector due to the reforms and the laws enacted. The financing structure is usually provided by the retail banks (mostly from the U.S., Europe, and Japan), national development banks, and from time to time the Export Credit Agencies. Due to the enacted reforms there are many new types of financing sources for infrastructure in Mexico, such as Infrastructure Education Bonds (“Bonos de Infraestructura Educativa”), Fibra “E” (a Mexican hybrid between the Real Estate Investment Trust and the Master Limited Partnerships), and Investment Project Certificates (“Certificados de Proyectos de Inversión”), among others.