The Mexican Stock Exchange Bets on Mexico’s Infrastructure
The Mexican Stock Exchange has designed two instruments which link investors’ financial resources with corporate infrastructure developments and real estate projects. CKDs and FIBRAS actively contribute to the financial growth of Mexico.
Infrastructure development is one of the major topics consistently permeating the Mexican stock market. Companies focused on this sector have developed products to enhance their projects which has motivated the Mexican Stock Exchange to develop two products that allow investors to participate in corporate plans like Certificates of Capital Development (CKDs), which are available within the capital segment.
These products support infrastructure, entrepreneurial and private capital projects. CKDs are issued by trusts that direct investment resources to growing sectors and activities which, in turn, adds flexibility and new diversifying alternatives to portfolios for institutional and qualified investors.
CKDs are designed to boost infrastructure projects such as roads, airports, ports, railroads, potable water and electric power, as well as develop real estate, mining and technology projects. Once CKDs reach maturity, they may provide options to realize their investment in the stock market either through the issue of shares, FIBRAS or other securities instruments.
The first CKD was issued by the Mexican Stock Exchange in 2009. Since then, 66 CKDs have been issued, which amount to $4.6 billion. Issuances are distributed as follows:
Real estate – 29.5 percent
Private capital – 24.7 percent
Infrastructure projects – 23.7 percent
Energy – 11.9 percent
Financial assets placement – 10.2 percent
Market FIBRAS
The second instrument available to investors is the FIBRAS (Fideicomiso de Inversión en Bienes Raíces, an REIT or Real Estate Investment Trust) which the Mexican Stock Exchange launched in 2011 with the intention of providing the real estate market with an instrument aimed at financing purchases and development. The real estate sector is considered part of the urban infrastructure, therefore, the aim of the Mexican Stock Exchange in implementing FIBRAS is to drive real estate development in Mexico, which in turn drives financing for different business, industrial and office segments, among others.
There are currently 10 FIBRAS listed in the Mexican Stock Exchange. Sixteen issuances have been placed since 2011, amounting to $7.4 billion.
This instrument is a novelty in Mexico and Latin America, which positions it as a new class of asset linking investments in the financial and the infrastructure sectors through the Mexican Stock Exchange.
In Summary
CKDs and FIBRAS are a solid alternative to help grow the Mexican infrastructure. The Mexican Stock Exchange has been—and will remain—a fundamental support for the financial development of the country.
Information provided by the Corporate Communications Department of the BMV Group (Bolsa Mexicana de Valores), the Mexican Stock Exchange. Direct email to bmv-comunicacion@grupobmv.com.mx.
