New Fibra E securities in the works for Mexican infra projects

Mexican engineering and construction firm Promotora y Desarrolladora Mexicana (Prodemex) is mulling plans to issue Fibra E securities for up to 10bn pesos (US$541mn).

The assets to be monetized would include two prisons – one in Michoacán state and another one in Durango – as well as a highway in Mexico state, local daily El Economista reported.

The prison infrastructure is currently managed by Prodemex under 22-year service provision (PPS) contracts. The PPS contract for the Vial Las Torres highway, which required 6bn pesos, is for 25 years.

According to documents accessed by the paper, the securities would be issued through a trust fund called Fibra Infraex and the proceeds would be used to pay off debt related to the projects.

Prodemex is part of a consortium that was awarded a 7.36bn-peso contract to build runway No. 3 of the new under-construction Mexico City international airport. More recently, the firm was awarded public-private partnership contracts to build hospitals for the national social security institute (IMSS) in Chiapas and Nayarit states, as well as one to rehabilitate and maintain the Matehuala-Saltillo highway in northern Mexico.

The PPP projects could eventually also be monetized through Fibra Infraex, according to the paper. A date for the issue of the securities has yet to be provided.

The Fibra E mechanism, which offers tax benefits to investors, was launched by the Mexican government in 2015 as a way to promote energy and infrastructure projects in a context of an economic slowdown and falling oil prices.

To date, infrastructure company Pinfra has been the only firm to issue Fibra E securities when it monetized one of its concessions, the Mexico City-Toluca highway, in October last year.