Introduction to the Comisión Federal de Electricidad (CFE)
The Comisión Federal de Electricidad (CFE) is a Mexican public company responsible for the generation, transmission, and distribution of electricity across the country. As a significant player in Mexico’s energy sector, CFE plays a crucial role in ensuring the nation’s power supply and infrastructure development.
Details of the Bond Issuance
CFE successfully raised 15,000 million pesos (approximately 816 million USD) through the issuance of sustainable bonds in the local stock market. The bond sale was divided into three tranches, attracting a demand of 32,595 million pesos (2.17 times the issued amount). The participating entities included seven pension fund administrators (afores), banks, insurance companies, investment funds, federal public agencies, and development banking institutions.
Reduced Interest Rates through Strong Demand
CFE managed to lower the overdraft rates by an average of 19 basis points (bps) in all three tranches due to the robust demand. This reduction resulted in substantial financial savings for the company, as stated in their communication to investors.
Bond Tranches and Terms
- Bono ‘CFE 25-3X’: Issued for 2,700 million pesos with a 3-year term. The interest rate is variable, calculated by adding 49 bps to the Tasa de Interés Interbancaria de Equilibrio a Un Día or TIIE de Fondeo.
- Bono ‘CFE 25-4X’: Issued for 4,800 million pesos with a 10.5-year term. The interest rate is fixed, calculated by adding 145 bps to the MBono 2036 rate, which was 8.82%.
- Bono ‘CFE 252UX’: Issued for 7,500 million pesos with a 15-year term. The interest rate is determined by adding 115 bps to the udibono 2040 rate, which was 4.55%.
High Ratings and Agent Banks
The sustainable bond issuance by CFE received ‘AAA’ ratings from Fitch Ratings, Moody’s, and S&P – the highest national ratings from these agencies. Banorte, BBVA, Santander, and Scotiabank acted as the placement agents for this issuance.
Commitment to Sustainable Investments
By issuing sustainable bonds, CFE commits to investing a similar amount of resources in eligible actions and projects according to its Sustainable Financing Framework. These investments fall under green categories, contributing to environmental sustainability and the company’s long-term goals.
Key Questions and Answers
- What are sustainable bonds? Sustainable bonds are debt instruments issued by organizations to finance projects with positive environmental and/or social impacts. In this case, CFE’s sustainable bonds will fund green projects.
- Why are these bonds important for CFE? Issuing sustainable bonds allows CFE to demonstrate its commitment to environmental responsibility while securing favorable financing terms due to the high demand from investors.
- What types of projects will CFE invest in? CFE will allocate the funds from these bonds to eligible green projects, such as renewable energy initiatives and energy efficiency improvements.
- What were the interest rates for each bond tranche?
- ‘CFE 25-3X’: Variable rate, calculated by adding 49 bps to the TIIE de Fondeo.
- ‘CFE 25-4X’: Fixed rate, calculated by adding 145 bps to the MBono 2036 rate (8.82%).
- ‘CFE 252UX’: Determined rate, adding 115 bps to the udibono 2040 rate (4.55%).
