Agricultural Fund Tightens, Upsizes

Fondo Especial para Financiamentos Agropecuarios (FEFA) has priced a MXP6bn ($472m) domestic bond, upsizing from MXP5bn while getting 2.3x demand and its tightest spread yet. The largest trust under second-tier development bank Fideicomisos Instituidos en Relacion con la Agricultura (FIRA) priced the 2016 notes at TIIE+16bp, tight to 20bp-area indications. Participation came from 40 investors, including Afores, investment funds, insurance companies, and private banks, according to sources familiar with the sale. “This is a new issuer in the market that represents quasi-government risk and offers an interesting spread compared to other government owned entities,” says a participating Mexico-City based investor. FEFA plans to use proceeds to fund operations. BBVA Bancomer, Banamex and HSBC managed the deal, rated AAA on a national scale. FEFA is a trust operated by development bank Fideicomisos Instituidos en Relacion con la Agricultura (FIRA). Established in 1954 by Mexico’s federal government, FIRA offers credit and guarantees and other services to the livestock, fishing, forestry and agribusiness sectors in Mexico. In FEFA’s previous transaction, it sold MXP3bn in 2015 bonds at TIIE+20bp in October last year. A follow-up transaction could take place in the second half of the year or next year.