A Mexican securitization deal in which White & Case played a key role was selected as "2010 Best Structured Financing Deal" and "2010 Best Innovation Deal" by LatinFinance magazine and as "2010 Latin America Domestic Currency Bond of the Year" by International Financing Review magazine.
In the deal, White & Case represented Overseas Private Investment Corporation (OPIC) and Corporación Andina de Fomento (CAF) in connection with the MXN 4.065 billion (approximately US$320 million) securitization of certain revenues of the public registry of property administered by IFREM (Instituto de la Función Registral del Estado de Mexico), an institute created by the State of Mexico.
The IFREM securitization deal represents a number of firsts: the first bond issuance outside the US to be guaranteed by OPIC in support of Mexican infrastructure, the first partial guarantee credit issued by CAF in Mexico, the first issued by CAF in local currency, and the first securitization of future flows of income from residential property fees in a Mexican state.
The bonds will be repaid from future IFREM revenues. Proceeds of the bonds will be used to modernize IFREM and other high priority infrastructure investments within the state, including a suburban train network connecting the state to Mexico City, a park in Toluca to mark the bicentennial of Mexico's independence and three medical centers.
In the transaction, bonds with a 20-year maturity were issued in a public offering consisting of two series: Series A, which was guaranteed by OPIC, in an aggregate principal amount of MXN 2.765 billion (approximately US$217 million); and Series B, which was partially guaranteed by CAF, in an aggregate principal amount of MXN 1.3 billion (approximately US$102 million).
The deal, which took over a year to complete, has been lauded as an innovative way of achieving long-term funding for infrastructure development. According to LatinFinance magazine, funding for governments' long term capital investments continues to be a challenge. A need for innovative financing in Latin America is apparent, particularly in Mexico, where there is an ambitious program for infrastructure but local debt capital markets still need deepening and broadening. The deal opens the door for other Latin American sub-sovereigns to work with new guarantors, as well as for other Mexican states to use the format.
The White & Case team included Edward R. Neaher, Jr., John L. Murphy, P. Daniel Smith, José Ignacio Segura Alonso, José Guillermo Ovalle Mendívil and Melanie A.M. Cariddi.