Introduction to FEFA and its Significance
The Special Fund for Agricultural and Livestock Financing (FEFA), a trust represented by Banco de México, plans to raise up to 8,000 million pesos through the issuance of three bonds in the local stock market. This move aims to support agricultural and livestock financing in Mexico, highlighting the importance of FEFA’s role in fostering economic growth and stability within this crucial sector.
Details of the Bond Issuance
The bond issuance will be conducted using the ‘vasos comunicantes’ mechanism, which refers to the simultaneous issuance of multiple instruments whose combined total does not exceed the maximum amount approved for the issuance.
Bond Characteristics
- FEFA 25-3: This bono will have a term of 616 days.
- FEFA 25V: This bono will have a term of 1,176 days.
- FEFA 25-2V: This green bono will have a term of 1,820 days.
Primary and Secondary Market Objectives
The primary issuance objective is to raise 4,000 million pesos, while the remaining 4,000 million pesos will be gathered through the oversubscription process.
Interest Rates and Allocation of Funds
The three bonds will pay a variable interest rate equivalent to the Tasa de Interés Interbancaria de Equilibrio a 1 día (TIIE) of Fondeo, plus an additional surcharge. Interest payments will be made monthly.
The funds obtained from FEFA 25-3 will finance the fund’s credit operations for the agricultural and livestock sector through its various authorized programs and products.
Resources gathered from FEFA 25V and FEFA 25-2V (green bono) will be allocated to environmentally positive purposes.
Credit Ratings and Regulatory Framework
The bonds have received the highest local ratings from HR Ratings (‘HR AAA’) and S&P Global Ratings (‘mxAAA’). These top-tier ratings reflect the creditworthiness and reliability of FEFA’s issuance, ensuring investor confidence.
The emissions are carried out by Banco de México as FEFA’s fiduciary under the Dual Cebures Program authorized by the National Banking and Securities Commission for 100,000 million pesos or its equivalent in dollars or Units of Investment (Udis).
