36395 - Credit Suisse Mexico Credit Opportunities Trust II

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Summary of Investment Information

Project Number

36395

Company Name

Credit Suisse Opportunity Trust II

Date SPI Disclosed

Oct 2, 2015

Country

Mexico

Region

Latin America and the Caribbean

Projected Board Date

Aug 27, 2015

Environmental Category

FI-1 - Significant

Status

Active

Last Updated Date

Nov 30, 2016

Department

Regional Industry FIG LAC & EUR

Industry

Funds

Previous Events

Approved : Aug 27, 2015
Signed : Sep 23, 2015
Invested : Sep 24, 2015

Sector

Other Sector Fund

Project Description

This project involves IFC’s participation in Credit Suisse Mexico Credit Opportunities Trust II (“CS Trust II”) certificates, a US$750 million MXN Pesos equivalent Certificado de Capital de Desarrollo (“CKD”) to be structured and managed by Banco Credit Suisse (Mexico), S.A. (“BCSM” or the “Manager”). This is the second IFC’s investment in a CKD in Mexico, after Credit Suisse Mexico Credit Opportunities Trust I (“CS Trust I”).

CS Trust II is meant to direct the mobilized funds to mid-sized enterprises with limited access to financing. Funding is one of the major obstacles for small and mid-sized firms to grow. As a result, there is a largely unmet demand for long-term credit from mid-sized companies in Mexico as confirmed by the demand for CS Trust I financing.

Associated Advisory Engagement

No associated advisory services.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	22.50

Development Impact

(i) The project will facilitate the deepening and strengthening of Mexican local capital markets by aiding in the mobilization of investment from Afores for the benefit of local corporates and SMEs.

(ii) The project will increase access to long- term finance for the underserved local mid-sized corporates in Mexico. Vehicles like these offer alternative sources of financing to mid-cap firms especially, which may not be able to get access to funding readily from local financial institutions.

(iii) The Trust is the second debt-oriented CKD in Mexico and IFC''s continued to support will further raise awareness of this asset class in Mexico thereby providing positive demonstration effect, potentially to additional investment in the sector.

(iv) There is a potential for replication of this project by others in Mexico, and in other regional markets facing similar capital market challenges.

(i) Stamp of approval: IFC''s participation will send a positive signal to additional investors into the Trust to reach the target amount.

(ii) E&S Standard Setting: As in the case of the previous CS CKD I, the Trust will 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) Financial Structuring: The Trust will be a validation of the model proposed and proved through CS CKD I, the first debt CKD in the market to provide sizable local higher yield structured credit exposure involving mid-cap firms to Mexican pension funds. 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.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The Trust will invest in equity in addition to the types of investments made in IFC’s first investment in the Trust, self-originated and third-party originated debt instruments. According to the IFC’s Sustainability Framework, it has been classified as Category FI-1. The project will apply the Trust Manager’s ESMS which (i) screens all Fund’s investments against IFC's Exclusion List, relevant Mexican laws and regulations, and the Performance Standards, as applicable and (ii) monitors the investees’ E&S performance in accordance with the nature of the origination. For all primary transactions and all equity investments, the Trust Manager is required to screen the corporate E&S performance against the IFC Performance Standards, in addition to the Trust Manager’s existing E&S due diligence and corporate reputational risk process. The project will also submit an annual report including an E&S section to all of its investors.

The portfolio will cover a wide range of sectors including oil& gas, mining, infrastructure and energy and targets a medium-size Mexican companies. The key risks and impacts may includeemissions, effluents and waste management,workers safety, and health and livelihood of surrounding communities. Given that the expected portfolio will likely include oil and gas and infrastructure sectors and given that some of the transactions have limited access to information, the Trust will limit its investments in high E&S risk transactions to 20% of the Trust. Such high E&S risk investments are defined in the Trust Agreement as transactions involving human settlements and relocation of people, indigenous peoples and communities and natural environments high biodiversity or valuable in ecological terms, and activities risky for surrounding communities.

S.no	Title	Anticipated Completion Date	Status
1	Nominate officers	05/31/2013	Completed
2	Establish SEMS	05/31/2013	Completed
9	Other1 - Implement PS screening for its equity investments and primary market transactions.	03/31/2023	Completed

Contacts

For Inquiries About the Project, Contact

Andres Borrego
Managing Director
mailto:andres.borrego@credit-suisse.com

Credit Suisse Asset Management, LLC
One Madison Avenue
New York, NY. 10010-3644

For Inquiries and Comments About IFC, Contact

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IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

Local Access of Project Documentation

Manuel Ramos
Managing Director
mailto:manuel.ramos@credit-suisse.com

Grupo Financiero Credit Suisse (México) S.A. de C.V.
Paseo de la Reforma No. 115, 27th floor
Lomas de Chapultepec, 11000. México D.F.

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