Washington DC, March 8, 2004
—An International Finance Corporation project to finance a water conservation plan in Mexico’s Tlalnepantla municipality has been awarded Latin America Municipal Finance Deal of the Year by
Euromoney Project Finance
magazine. The project was also recently awarded Local Government Bond of the Year by
Latin Finance
magazine.
IFC, the private sector arm of the World Bank Group, provided a peso-denominated partial credit guarantee of up to $3 million to support the issue of up to $8.8 million in bonds in the Mexican capital market. The Tlalnepantla operation represents IFC’s first direct municipal finance deal and the first municipal bond offering in Mexico without recourse to a federal guarantee or assignment of federal transfers.
The proceeds are being used to finance the design and construction of a wastewater treatment plant – the first in Tlalnepantla – that will recycle residential and industrial wastewater for industrial reuse. The use of recycled water will free up potable water to meet the growing demand, reduce the flow of untreated sewage into a drainage canal of the Rio San Javier, and relieve some of the pressure on groundwater aquifers in the Mexico City area. The project will also implement a leak reduction program for the existing water supply network.
For Declan Duff, director of the IFC/World Bank Group Municipal Fund, these awards represent “an exciting and encouraging recognition.” Mr. Duff added, "The Tlalnepantla project is pioneering in several ways. IFC, along with our partners, Protego and Dexia, introduced a promising new model of finance in Latin America, whereby municipalities can secure financing entirely through their own fiscal revenues.”
For Bernard Pasquier, director of IFC’s Latin America and Caribbean Department, “this operation opens a new financing instrument that will help raise money for local government projects in Mexico and throughout the region. The operation also created a new asset class in local currency for the Mexican capital markets, so that infrastructure projects can be financed by local institutional investors, without sovereign support."
Municipal governments provide the vast majority of infrastructure services, including water, in developing countries, but they have traditionally have had limited access to capital markets.
IFC projects win
Latin Finance
awards two years in a row
Latin Finance
magazine also recently recognized the Tlalnepantla project as Local Government Bond of the Year. The magazine featured the project in its February 2004 issue as one of the “Best and Brightest” deals of the year.
This is the second consecutive year in a row that IFC has received an award from
Latin Finance
for its work in Latin America. In 2003, the magazine honored IFC’s syndication of Odebrecht, the Brazilian construction company, as Syndicated Loan Deal of the Year. IFC was the arranger and lender of record of a $280 million loan facility to Odebrecht.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's committed portfolio at the end of FY03 was $16.8 billion with an additional $6.6 billion held for participants in loan syndications.
