Banobras Shops New Product to Private Sector

Last month’s State of Mexico refinance with the help of a Banobras first loss guarantee opens the door for other borrowers to leverage the state development bank’s rating. “This deal is very important because it opens up a new form of operating for Banobras,” Banobras president Alonso Garcia Tames tells LatinFinance. Garcia says Banobras is starting to assess which indebted states could benefit from guarantees, and he does not rule out applications beyond states and municipalities. “This a very efficient product that will help us support states in collaboration with the private sector,” says Garcia. “For project finance, we think this instrument could be very valuable,” he adds. This would apply to local and foreign firms working on projects in Mexico. “It’s a way for the development bank – instead of competing with the private sector – to collaborate with it,” says Garcia. The official adds that there are no new deals coming in the short term. Banobras is also working on a project to channel funds to Mexican municipalities, particularly less developed ones. Last year’s pilot in Michoacan paved the way for new projects underway in Chiapas and upcoming in Puebla, Oaxaca, Durango and Veracruz.