DF Brings Tight MXP2bn 2-Tranche

Mexico City’s government has priced a MXP2.0bn 2-tranche deal through guidance on MXP8.7bn in orders, according to a banker on the sale. A MXP900m 2015 tranche pays TIIE plus 14bp, while a MXP1.1bn 2020 portion pays a fixed 7.9%, or Mbonos plus 90bp. The securitization of tax revenues from the federal government had been expected to pay around TIIE plus 40bp and Mbonos plus 100bp. The bond were sold though a special trust using a structure in which the federal government is technically the issuer, since DF government is not permitted to sell bonds on its own. Proceeds are passed to DF in return for it pledging future proceeds from federal tax disbursements marked for the capital. Some 59 accounts, including Afores, mutual funds and insurance companies, participated, a banker on the deal says. The transaction is the first in a series of 3 similar deals from DF this year that will total MXP5.3bn. Proceeds will help fund public works, most notably construction of a new metro line. Deutsche Bank managed the sale, rated AAA on a national scale.