Washington DC, March 8, 2004—An International
Finance Corporation project to finance a water conservation plan in Mexico’s
Tlalnepantla municipality has been awarded Latin America Municipal Finance
Deal of the Year by Euromoney Project Finance magazine. The project
was also recently awarded Local Government Bond of the Year by Latin
IFC, the private sector arm of the World Bank Group, provided a peso-denominated
partial credit guarantee of up to $3 million to support the issue of up
to $8.8 million in bonds in the Mexican capital market. The Tlalnepantla
operation represents IFC’s first direct municipal finance deal and the
first municipal bond offering in Mexico without recourse to a federal guarantee
or assignment of federal transfers.
The proceeds are being used to finance the design and construction of a
wastewater treatment plant – the first in Tlalnepantla – that will recycle
residential and industrial wastewater for industrial reuse. The use
of recycled water will free up potable water to meet the growing demand,
reduce the flow of untreated sewage into a drainage canal of the Rio San
Javier, and relieve some of the pressure on groundwater aquifers in the
Mexico City area. The project will also implement a leak reduction
program for the existing water supply network.
For Declan Duff, director of the IFC/World Bank Group Municipal Fund, these
awards represent “an exciting and encouraging recognition.” Mr. Duff
added, "The Tlalnepantla project is pioneering in several ways. IFC,
along with our partners, Protego and Dexia, introduced a promising new
model of finance in Latin America, whereby municipalities can secure financing
entirely through their own fiscal revenues.”
For Bernard Pasquier, director of IFC’s Latin America and Caribbean Department,
“this operation opens a new financing instrument that will help raise
money for local government projects in Mexico and throughout the region.
The operation also created a new asset class in local currency for the
Mexican capital markets, so that infrastructure projects can be financed
by local institutional investors, without sovereign support."
Municipal governments provide the vast majority of infrastructure services,
including water, in developing countries, but they have traditionally have
had limited access to capital markets.
IFC projects win Latin Finance awards two years in a row
Latin Finance magazine also recently recognized the Tlalnepantla project
as Local Government Bond of the Year. The magazine featured the project
in its February 2004 issue as one of the “Best and Brightest” deals
of the year.
This is the second consecutive year in a row that IFC has received an award
from Latin Finance for its work in Latin America. In 2003, the magazine
honored IFC’s syndication of Odebrecht, the Brazilian construction company,
as Syndicated Loan Deal of the Year. IFC was the arranger and lender of
record of a $280 million loan facility to Odebrecht.
The mission of IFC (www.ifc.org)
is to promote sustainable private sector investment in developing countries,
helping to reduce poverty and improve people's lives. IFC finances
private sector investments in the developing world, mobilizes capital in
the international financial markets, helps clients improve social and environmental
sustainability, and provides technical assistance and advice to governments
and businesses. Since its founding in 1956, IFC has committed more than
$37 billion of its own funds and arranged $22 billion in syndications for
2,990 companies in 140 developing countries. IFC's committed portfolio
at the end of FY03 was $16.8 billion with an additional $6.6 billion held
for participants in loan syndications.