Mexico’s CFE Restructures Debt to Use Savings to Meet Demand from Nearshoring

The state-owned utility aims to lessen its financing risks and improve its debt profile

Mexico’s CFE Restructures Debt In Bid to Use Savings to Meet Demand from Nearshoring
October 03, 2023 | 02:00 AM

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Mexico City — Mexico’s state-owned power utility Comisión Federal de Electricidad (CFE) has refinanced $877 million in debt as part of its debt management strategy.

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The transaction consisted of the repurchase of four bonds: 4.875% notes due 2024; 4.750% notes due 2027; 6.125%; notes due 2045 and 5.750% notes due 2042.

The company said in a statement that it took advantage of “the current interest rate and exchange rate environment”.

Central bank interest rates, mainly in Mexico and the United States, are high and have increased the cost of money for their governments and companies, while the Mexican peso has strengthened against the US dollar.


So far this year, the Mexican currency has appreciated 9.34%.

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The objectives of the operation were to reduce the short-term refinancing risk, improve the debt maturity profile, extend the average life of the debt, reduce CFE’s level of indebtedness in foreign currency and generate financial savings to direct them to its investment program.

“The results of the operation allowed us to generate capital savings of $20.5 million, given that all bonds were repurchased below par (face value),” the company said.


The state-owned giant added that it will save $146.3 million in avoided interest from the remaining term of the bonds, in addition to reducing the cost in pesos of the repurchased debt in foreign currency.

The financial savings from the operation seek to strengthen CFE’s investment program to increase, modernize, rehabilitate and maintain productive assets and infrastructure to meet the growing demand for electricity from commercial phenomena such as nearshoring, in addition to accelerating energy transition plans to reduce negative impacts on the environment, particularly greenhouse gas emissions.

The global coordinators of the financial operation were the firms BNP Paribas, Citigroup, Morgan Stanley and SMBC Nikko Securities.

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