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OPIC Project in Mexico Wins 2010 Best-of-Year Awards

January 25, 2011

WASHINGTON, D.C. – A first-of-its-kind Overseas Private Investment Corporation (OPIC) project using a local capital markets bond issuance to modernize the State of Mexico’s public property registry has earned two 2010 Deal of the Year awards from Latin Finance Magazine – in the Best Structured Financing and Best Financing Innovation categories – as well as the Latin America Domestic Currency Bond Deal of the Year from International Financing Review.

“We at OPIC are honored by both these awards. Earning top honors from two of the financial industry’s leading publications is welcome evidence that OPIC remains at the cutting edge of creative financial structuring to help develop local capital markets. But the real beneficiaries are Mexican home owners who will have greater access to credit as a result of this project,” said OPIC President and CEO Elizabeth Littlefield.

“We are delighted to share these awards with our excellent partners in the project: MBIA Inc., its subsidiary LatAm Capital Advisors, the Andean Development Corporation, and the State of Mexico. The contributions of each were indispensable to the success of this project. It was true teamwork,” Ms. Littlefield said.

The project involves OPIC’s first-ever guarantee for a domestic capital market bond issuance in local currency by a local government agency.  OPIC is guaranteeing 2.765 billion pesos of bonds (approximately $217 million) issued in the Mexican market. By relying on domestic rather than international investors, the project will expand Mexican capital markets and their ability to support infrastructure improvements in the country. 

The 20-year bonds, part of an overall issuance of approximately $320 million, will be repaid from the future revenues of the Instituto de la Función Registral del Estado de Mexico (IFREM), the State of Mexico’s Public Registry of Properties. Proceeds of the bonds will be used to modernize IFREM and other high-priority infrastructure. The modernization will enable IFREM to provide better service to the State’s residents, which will vastly improve the ability of home owners, investors and lenders to have legal certainty of title to property. 

As a result, a home owner living in the State will now be able to register his or her home ownership with IFREM within days, which will greatly improve his or her  access to credit. Local investment will be stimulated, boosting  the local and national economy. At the same time, as a result of forthcoming investments in the State’s infrastructure, home owners will have improved access to mass transit, basic utilities and health care.  

The transaction marks the first time OPIC has guaranteed a sub-sovereign entity in its efforts to raise local-currency capital for much-needed modernization and investment.  It is also the first bond issuance in Mexico backed by property registry fees and will provide local capital markets investors with an investment-grade peso-denominated long-term asset rated AAA by Standard & Poor’s and Fitch ratings agencies.  The transaction was made possible through the participation of a U.S. private sector sponsor, MBIA Inc., a New York-based financial services firm, through one of its indirect subsidiaries, LatAm Capital Advisors. Done in accordance with international financial market standards with respect to credit underwriting, documentation, transparency and accountability, it is expected to serve as a catalyst for future high-grade issues.