FIEMEX in Landmark $1.49 Billion Bond Offering

Cleary Gottlieb represented Fideicomiso de Inversión en Energía México (FIEMEX), a special purpose trust (fideicomiso) sponsored by Mexico’s National Infrastructure Fund (FONADIN) and managed by Mexico Infrastructure Partners (MIP), in its landmark $1.49 billion bond offering in the international capital markets.

The transaction consisted of $1.49 billion of 7.25% senior secured notes due 2041 offered for sale in the United States pursuant to Rule 144A and abroad pursuant to Regulation S. FIEMEX intends to use a portion of the net proceeds to repay and cancel an existing bridge credit facility incurred to fund its $6.2 billion acquisition of 12 combined-cycle gas turbine plants and a wind farm from Iberdrola S.A. (Iberdrola).

The offering is the largest single-tranche project finance bond issuance in the Mexican energy sector and one of the largest project bond issuances in Latin America to date.

The offering was part of a complex acquisition-financing strategy implemented in close coordination with the Mexican Ministry of Finance (Secretaría de Hacienda y Crédito Público) and showcases the Mexican government’s strategic use of private capital to support public policy goals, particularly in strengthening the domestic energy sector. The offering received an investment-grade rating from the three largest rating agencies, underscoring market confidence in the financing structure and in Mexico more generally.

MIP is the largest infrastructure and energy fund manager in Latin America, with approximately $11 billion in assets under management. FIEMEX operates the second-largest energy generation platform in Mexico after the state utility Comisión Federal de Electricidad (CFE), with a total combined installed capacity of 8.5 GWs accounting for 9.5% of the market share in the Mexican electricity market.

The transaction launched on September 3, 2024, priced on September 10, 2024, and is expected to close on September 18, 2024. Barclays, BBVA, Santander, and SMBC acted as global coordinators and joint bookrunners, and BNP Paribas and Scotiabank participated as joint bookrunners.

The notes are secured by FIEMEX’s power plants, including the real estate where they are located, ancillary equipment, as well as cash flows generated by them. The collateral documents include a sophisticated waterfall structure to allocate cash flows to service debt, fund reserves, and contribute to operating and capital expenditures for FIEMEX’s plants.

Cleary previously represented FIEMEX in a secured financing to fund the acquisition of Ibedrola’s power plants in Mexico. The initial financing for the acquisition consisted of a $1.39 billion syndicated bridge credit facility led by Barclays, BBVA México, Banco Santander, and SMBC; a $2.48 billion syndicated term loan credit facility led by Banobras, Bancomext, and Nafin; and a $300 million letter of credit facility, with Bancomext acting as issuing bank and Bancomext, BBVA México, and Nafin acting as facility lenders. As part of the financing, FIEMEX also entered into hedging transactions in connection with the portion of the financing for which the coupon or interest thereon is payable based on a variable rate.