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Project Financing and Political Risk Guarantee for Acquiring Portfolio of Power Assets in Mexico
Supporting Business Development of Japanese Companies in Mexico’s Power Projects

  • Region: Latin America and the Caribbean
  • Infrastructures
  • Overseas Investment Loans
  • Guarantees
  • Project Finance
NR/2010-34
September 30, 2010
  1. The Japan Bank for International Cooperation (JBIC; President & CEO: Hiroshi Watanabe)*1 signed on September 29 (U.S.time) a loan agreement in the aggregate amount of up to 750 million US dollars with MT Falcon Holdings Company, S.A.P.I. de C.V. (MT Falcon), a Mexican firm where Mitsui & Co., Ltd. (“Mitsui”) and Tokyo Gas Co., Ltd. (“TGC”) have equity stakes to finance the acquisition of a portfolio of power assets in Mexico.  The loan, provided in project financing,*2 was cofinanced with the Bank of Tokyo-Mitsubishi UFJ, Ltd., Mizuho Corporate Bank, Ltd., and Sumitomo Mitsui Banking Corporation, with JBIC providing political risk guarantee for the portion financed by these private financial institutions.
     
  2. The purpose of the loan is to provide financial support for the acquisition of a portfolio of power assets owned by a Spanish company, Gas Natural, and their long term operation and maintenance by MT Falcon.  The target assets consists of five independent power producers (IPPs)*3 owning five power stations (combined total power generation capacity: 2,233 MW) located in northeastern Mexico, a gas pipeline company, and another associated company. This is portfolio-oriented project financing to be repaid by revenues of the multi-IPPs generated by selling electricity to the off-taker, Federal Electricity Commission (Comisión Federal de Electricidad (CFE)), a state-owned power company in Mexico.  
     
  3. In Mexico, President Felipe Calderón launched the National Infrastructure Program*4 in 2007, which focuses on investments in infrastructure projects.  In the power sector, the Program set out an expansion of power generation capacity of 9,000 MW by 2012.  It is thus expected that new IPP-style power generation projects will be planned in the coming years.
     
  4. Given this circumstance, it is expected that supporting the acquisition of power assets by Mitsui and TGC with this loan and guarantee will encourage Japanese firms to increase their presence in Mexico's power market, and that this loan and guarantee will help Japanese firms promote their participation in infrastructure projects, including power generation projects and the acquisition of interests in IPP projects.
     
  5. JBIC will support overseas infrastructure projects undertaken by Japanese firms by performing its function, employing a range of facilities and schematic arrangements.
Note
  1. *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).
  2. *2 Project finance is a financing scheme relying on cash flows generated by a project.
  3. *3 An independent power producer (IPP) builds and operates a power plant on its own and sells the output to power utilities.
  4. *4 The National Infrastructure Program (NIP) is a national project for making investments over a period of 2007-2012 by the public and private sectors.  During this period, infrastructure investments surpassing 330 billion US dollars will be made in the oil and natural gas, road, railroad, port, airport, power and telecommunications sectors.
  5.  

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