Mexico’s government is looking to use a special purpose vehicle with a mix of debt and equity to finance its purchase of Iberdrola assets after the deal closes, said Deputy Finance Minister Gabriel Yorio in an interview with Bloomberg Television.
(Bloomberg) — Mexico’s government is looking to use a special purpose vehicle with a mix of debt and equity to finance its purchase of Iberdrola assets after the deal closes, said Deputy Finance Minister Gabriel Yorio in an interview with Bloomberg Television.
Mexico will be a bridge lender in the first stage of the transaction to purchase $6 billion worth of power plants and a wind farm, Yorio said. The government aims to transition into an SVP vehicle as soon as three months after the deal closes, he added. It’s one of the biggest recent energy deals during the current administration.
“There are different forms to do the purchase, and since we have to close the transaction as soon as possible, in the first phase we’ll have a system of funding to serve as a bridge in the transaction,” Yorio said in an interview with Bloomberg Television’s Shery Ahn.
Read More: AMLO Widens State’s Reach With $6 Billion Iberdrola Deal (1)
After the transaction with Iberdrola is complete, the government will seek to “partially exit” it and involve local and international market participants through an alternative local instrument that could include Fibras, Cecades or Cerpis, he added on the sidelines of the interview. The transaction will not be a private placement, it will be listed in the local market, he said.
The country’s development bank trust Fonadin will receive a 45 billion-peso ($2.5 billion) contribution from the Finance Ministry to purchase a 51% stake in the deal, Finance Minister Rogelio Ramirez de la O previously announced. Bloomberg News reported Banco Bilbao Vizcaya Argentaria, Banco Santander SA and Bank of America Corp. have expressed interest in backing Mexico on the deal.
Here are other key points from the interview:
- Mexico’s government has “strong” commitment to supporting Pemex financing, Yorio said in the BTV interview
- “2023 will be the year when we are piloting the new refineries”
- The Mexican peso is doing well due to remittances and macro fundamentals, the peso is expected to stay strong
- Mexico is seeing “a lot of commitment” from ESG investors
–With assistance from Maya Averbuch.
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