Introduction to CFE and its Recent Financial Success
The Comisión Federal de Electricidad (CFE), Mexico’s state-owned electric utility, recently conducted a successful issuance of Certificados Bursátiles (CEBURES) with a sustainable label, garnering an unprecedented demand of 32,595 million pesos (mdp).
Details of the CEBURES Issuance
- CFE issued CEBURES worth 15,000 mdp with a sustainable label in the local financial market.
- The operation achieved a demand of 32,595 mdp, which is 2.17 times the issued amount.
Background on CFE and its Importance
The CFE is a crucial entity in Mexico’s energy sector, responsible for generating, transmitting, and distributing electricity to over 90% of the country’s population. Understanding its financial health and investor confidence is essential for assessing Mexico’s overall economic stability.
Participants and Demand in the CEBURES Issuance
Seven out of ten AFORES (Administrators of Individual Retirement Savings Accounts), banks, insurance companies, investment funds, federal public organizations, and development banks participated in the CEBURES issuance. This broad participation resulted in an unprecedented demand of 32,595 mdp, which is historically high for a CFE CEBURES issuance and ranks third among corporate issuances in the Mexican debt market since 2020.
Impact of High Demand on CFE
The strong demand allowed CFE to reduce average overdraft rates by 19 basis points (bps) across the three tranches, leading to significant financial savings for the company.
Tranche Details and Interest Rates
- CFE 25-3X: A 3-year term with an interest rate [TIIE de Fondeo +49 bps] versus an initial overdraft rate of +65 bps for 2,700 mdp.
- CFE 25-4X: A 10.5-year term with an interest rate [M Bono 2036 of 8.82% +145 bps] versus an initial overdraft rate of +165 bps for 4,800 mdp.
- CFE 252UX: A 15-year term with an interest rate [Udibono 2040 of 4.55% +115 bps] versus an initial overdraft rate of +135 bps for 7,500 mdp.
Credit Rating and Confidence in CFE
CFE received the highest local credit rating (AAA) from Fitch Ratings, Moody’s, and Standard and Poor’s, reflecting its high credit quality and financial strength. This confidence in CFE’s ability to meet its financial obligations in the short, medium, and long term is crucial for investors.
Purpose of the Issuance and CFE’s Sustainability Commitment
The issuance does not add to CFE’s debt, as the funds will cover a scheduled CEBURES payment in November and refinance short-term debt. This will extend CFE’s debt amortization profile, reinforcing its commitment to financial discipline and solidifying its position as a key issuer in Mexico’s public debt sector.
CFE’s Sustainability Efforts
By issuing CEBURES with a sustainable label, CFE reaffirms its dedication to sustainability. The company pledges to invest a similar amount of resources in eligible investment actions according to its Sustainable Financing Framework, focusing on green categories such as renewable energy and energy efficiency, as well as social categories like providing free or subsidized essential services in remote and marginalized communities.
Key Questions and Answers
- What is CFE? The Comisión Federal de Electricidad (CFE) is Mexico’s state-owned electric utility responsible for generating, transmitting, and distributing electricity.
- What does the sustainable CEBURES issuance mean for CFE? The issuance demonstrates CFE’s commitment to sustainability and its financial strength, as it allows the company to invest in green energy projects and social initiatives.
- How did the high demand impact CFE? The strong demand enabled CFE to reduce average overdraft rates, leading to significant financial savings.
- What are the green and social categories CFE will invest in? CFE will focus on renewable energy, energy efficiency, and providing free or subsidized essential services in remote communities.
