WASHINGTON, D.C., July 24 -- The International
Finance Corporation (IFC) has signed a US$100 million, 12-year debt financing
agreement with Apasco, S.A. de C.V., a Mexican cement producer, through
which the company will issue the first long-term corporate debt securities
since the Mexican peso devaluation of last December. The project features
a unique financing mechanism developed by IFC to bring new sources of long-term
investment capital -- primarily from insurance companies and pension funds
-- to emerging market companies. It is the first time an IFC co-financing
arrangement for a single company has received a credit rating from a major
rating agency. "This transaction represents a significant step in
IFC's support for the Mexican private sector," according to Mr. Helmut
Paul, Director of IFC's Latin America and the Caribbean Department. "The
willingness of U.S. institutional investors to purchase securities with
a 12-year maturity is a major vote of confidence in Mexico," he added.
Prior to the peso cri
sis, Mexican corporations regarded as good credit risks typically obtained
debt financing of 3-5 years from the Euromarkets. Since the crisis, even
good-quality companies have had difficulty issuing debt with maturities
longer than six months. To make long-term funding available for Apasco,
IFC developed an innovative financing structure to access the U.S. institutional
private placement debt market. IFC is extending a US$100 million loan to
Apasco, of which US$15 million is for its own account and US$85 million
consists of a participation interest sold by IFC to a special purpose business
trust based in Wilmington, Delaware. (More) Press Release No. 96/07, page
2 of 2 The special purpose trust subsequently issued US$85 million of 12-year
Asset-Backed Certificates, which were rated as investment-grade and then
sold as a private placement to four major U.S. life insurance companies.
Swiss Bank Corporation and Banamex acted as placement agents for the sale.
"The unusually long maturity for Apasco, and the inves
tment-grade rating obtained for the securities, are significant achievements,"
according to Mr. Paul. "This special trust structure provides a new
solution to the growing demand for long-term capital in emerging markets.
IFC will be able to mobilize more financing for private infrastructure
projects and basic industries, which need the extended maturities realized
in this transaction. IFC expects to duplicate this structure with other
companies, both elsewhere in Latin America and throughout the developing
world," he added.