Introduction to the Comisión Federal de Electricidad (CFE)
The Comisión Federal de Electricidad (CFE) is a Mexican public company responsible for generating, transmitting, and distributing 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 Sustainable 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) from various investors, including 7 pension funds (afores), banks, insurance companies, investment funds, federal public agencies, and development banking.
Benefits of the Bond Issuance
CFE’s strong demand allowed them to reduce the overdraft rates by an average of 19 basis points (bps) compared to the initially announced reference rates for all three tranches. This reduction resulted in substantial financial savings for the company.
Bond Tranches and Terms
- Bono ‘CFE 25-3X’: Issued for 2,700 million pesos with a 3-year term, bearing a variable interest rate determined 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, bearing a fixed interest rate 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, bearing an interest rate determined by adding 115 bps to the udibono 2040 rate, which was 4.55%.
High Ratings and Agent Colocadores
The sustainable bond issuance by CFE received ‘AAA’ ratings from Fitch Ratings, Moody’s, and S&P – the highest national ratings from these agencies. The agents responsible for placing the bonds were Banorte, BBVA, Santander, and Scotiabank.
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.
Key Questions and Answers
- What are sustainable bonds? Sustainable bonds are financial instruments issued by organizations to raise capital for projects or initiatives that have positive environmental and/or social impacts.
- Why did CFE issue sustainable bonds? CFE issued these bonds to finance environmentally friendly projects and actions, aligning with their commitment to sustainability.
- What were the terms of CFE’s bond issuance? CFE issued three bonds with different terms and interest rates: ‘CFE 25-3X’ (3 years, variable rate), ‘CFE 25-4X’ (10.5 years, fixed rate), and ‘CFE 252UX’ (15 years, determined rate).
- What ratings did CFE’s bonds receive? CFE’s sustainable bonds received the highest ‘AAA’ ratings from Fitch Ratings, Moody’s, and S&P.
- Who were the agents responsible for placing CFE’s bonds? Banorte, BBVA, Santander, and Scotiabank were the agent colocadores for CFE’s sustainable bond issuance.
