32407 - CS Mexico Credit Opportunities Trust

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Summary of Investment Information

Project Number

32407

Company Name

CREDIT SUISSE MEXICO OPPORTUNITIES TRUST

Date SPI Disclosed

Jul 19, 2013

Country

Mexico

Region

Latin America and the Caribbean

Projected Board Date

Apr 25, 2013

Environmental Category

FI-1 - Significant

Status

Active

Last Updated Date

Nov 30, 2016

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Apr 25, 2013
Signed : Jun 14, 2013
Invested : Jul 17, 2013

Sector

Capital Markets Financing Company (Including Investment Banking)

Project Description

The project involves an IFC investment in a Trust, Credit Suisse Mexico Opportunities Trust (“MEXCO” or the “Trust”), in Mexico that has been set-up to mobilize long-term funding from institutional investors to on-lend to local mid-sized companies. The Trust is a newly established vehicle that will channel financial resources from primarily Afores (Mexican pension funds) to medium size corporates, allowing Afore investors to diversify their portfolio and enabling greater access to credit for medium size corporates. To achieve this, the Trust has issued Certificados de Capital de Desarrollo (“CKDs”), publically listed securities under the Mexican law, to help channel economic growth of these companies.

The Trust is expected to invest in a portfolio of debt assets involving between 20-30 medium sized Mexican companies.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	50.0

Development Impact

(i) Deepening and Strengthening of Local Capital Markets: The project will facilitate the deepening and strengthening of Mexican local capital markets by mobilizing investment from Mexican Pension Funds for the benefit of local corporates.
(ii) Access to Finance: The project will increase access to longer-term finance for the underserved local corporates segment in Mexico. Vehicles like this offer alternative sources of financing to mid-cap firms especially, which may not be able to get access to longer-term funding readily from local financial institutions.
(iii) Replication Potential: There exists the potential for replication of this project by others in Mexico, and in other regional markets facing similar capital market profiles

(i) Market Support: IFC will support a new domestic vehicle, which will increase the number of investment instruments available to local market participants - both issuers and investors.
(ii) Standard Setting: The Trust is expected to adhere to World Bank/IFC E&S standards which will raise the bar for strong E&S best practices among institutional investors in Mexico.
(iii) Demonstration Effect: The Trust is expected to be one of the first in the market to provide sizable local higher yield structured credit exposure involving mid-cap firms to Mexican pension funds. Previous CKDs focused on real estate assets, and focused on equity investments. Raising awareness in higher yielding debt asset class in Mexico is likely to lead to positive demonstration effects, potentially leading to additional investment in the sector.
(iv) Affordable alternative financing for mid-sized corporates: Targeted mid-sized corporates currently obtain significant portion of their funding from vendors at high interest rates and little if any credit from banks - with both situations unlikely to change in the immediate future. CKDs will provide them with alternative access to more affordable financing.

E&S Category Rationale / Risks and Mitigation

The Project has been classified as Category FI-1 according to the IFC''s Environmental and Social Review Procedures. It involves an IFC investment into CS Credit Opportunities Trust (Trust), which will rely on an investment manager to conduct and manage its affairs. The investment portfolio is expected to be diversified in terms of industry sectors but primarily targeting medium-sized and smaller companies in Mexico, although larger entities may also be considered. The Trust plans to provide financing to about 20 companies. The deal size will range between US$20 and US$30 million. The Trust will be required to screen all its investments against the IFC Exclusion List, relevant E&S laws and regulation as well as apply IFC Performance Standards

The main E&S risks and potential impacts of the project derive from the Trust’s possible investments in sectors with higher inherent E&S risks. At the corporate level Credit Suisse AG has key elements of a sound E&S Management System (ESMS) in place that include: 1) a comprehensive Sustainable Policy and Policies for transactions in select high risk sectors; 2) a designated E&S risk assessment team, 3) a procedure for E&S categorization, 4) a procedure for reflecting E&S requirements in legal agreements, and 5) a system for verification of compliance with relevant E&S laws and regulations. Credit Suisse has also experience in applying IFC’s Performance Standards in project finance deals. The Trust is already a subject to compliance with all relevant E&S policies of Credit Suisse AG.

Contacts

For Inquiries About the Project, Contact

Andres Barrego
Managing Director
Credit Suisse Asset Management, LLC
Institucion de Banca Multiple, Grupo Financiero Credit Suisse (México)
Avenida Paseo de la Reforma 115, Piso 26 Colonia Lomas de Chapultepec 11000, Distrito Federal, Mexico
Phone: + 5255 5283 8982
Fax: + 5255 5283 8985

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Task Title & Description	Anticipated Completion Date	Status	Comments	Completion Date
Formalize procedures		Completed	Completed	06/14/2013
Staff Training		Completed	Completed	06/14/2013

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