CFE Planning Local Issue

Mexico’s CFE is planning to issue up to MXP4bn in 2 local market tranches, according to Moody’s, which rates the deal Baa1 globally and Aaa.mx locally. The proposed notes would be the first and second draw downs under a new 5 year MXP12bn certificados bursatiles set to be authorized by the CNBV. The program will be established at Fideicomiso F/411, a trust operated by Bank of America Mexico’s fiduciary division on behalf of CFE. Individually, the size of each of the two instruments could be up to MXP4bn, with combined principal not to exceed MXP4bn. The proposed issuance includes amortizing inflation indexed and nominal fixed rate senior unsecured notes, with tenors up to 10 years, says Moody’s. CFE will use proceeds from the issuance for refinancing certain public works investments. CFE, wholly-owned by the Mexican federal government, is Mexico’s dominant, vertically-integrated electric utility and the largest electric utility in LatAm, with installed generation capacity of close to 50GW, including independent power providers, according to Moody’s. The Mexican government does not guarantee CFE debt, but Moody’s believes there is a high likelihood of government support in the case of distress.