Fiber E is a trust fund organized according to the Mexican laws before an authorized banking institution to operate in Mexico, serving as its fiduciary and qualified as FIBER E for tax purposes; it issues securities for investing public under the figure of trust bonds in energy and infrastructure. They are registered in the National Securities Registry and listed in the Mexican stock exchange in accordance with the Stock Market Law and the Single Regulation for Issuers. The senior trust bonds will provide its holders property rights pro rata over the trust patrimony.
This vehicle is designed for existing projects. In principle, it will serve Fiber infrastructure that is already generating income, such as an airport, a refinery or a road. The carrier may also invest in new projects, but not exceeding 25% of their investments; 100%, 75% must be designed to mature projects.
This financial vehicle arises in a context in which the federal government faces a period of economic slowdown pressured by the depreciation of the peso, particularly by the fall in oil prices, which have fallen 50% so far this year. Given this scenario, the government created a special category of investment that will enable institutional investors (banks, finance companies, insurance companies, pension funds, etc.) and the general investing public participation in the energy sector and infrastructure in Mexico.
Fiber E will be structured through a Mexican trust created to issue bonds, Trust Certificates (CBF) and offered to be placed through a public offering on the Mexican Stock Exchange. It was established that the trustee must be an authorized Mexican bank or a brokerage, and corporate shareholders should be promoted Mexican residents for tax purposes.
There is a sour aspect. Foreign investors will be required to post a profit here in Mexico, and then, they will have to take the road of double taxation to streamline tax issues. No doubt this is all that the government wants to keep growing the tax base through this financial instrument.
Although in the regulation published on 20 October in the Official Journal of the Federation (DOF), the Finance Ministry does not mention potential managers of the trust, dependence highlights some of the responsibilities that the administrator must take:
- Ensuring that the compensation scheme, commissions and incentives is set so that at all times the interests of the holders are properly cared.
- Caring for the liability regime, including the payment of damages, unless they have agreed contractual penalties.
- Providing the technical committee, the common representative and the holders of stock certificates trust with a quarterly report on the performance of their duties, as well as information and documentation requested in the performance of their duties.
- Performing their duties diligently and in the best interest of the trust and of the holders.
There are at least three major differences from the rest of the fibers:
- The foreign pension funds are not exempt from tax on profits received from the fiber E.
- The above serves this type of income (business) generally they are not exempt for such investors in its country of origin.
- Investors may be public or private institutions, national or foreign, provided they are based in Mexico.
In conclusion, the fiber E is an emitter investment trust that will receive via public placement on the Mexican Stock Exchange. Thus, potential candidates are institutional investors, public investors, foreign investors and Pension Funds.
The federal government's role in Fiber E, will be only as an intermediary between the financial vehicle, promoted companies and investors, but it will have no responsibility or interference in the operation and functioning of the same.
Fiber E may consist of projects related to the following activities:
- Treatment, refining, sale, marketing, transportation and oil storage and transportation, storage, distribution and sale of natural oil and pipeline transportation and storage of petrochemical gas.
- Generation, transmission or distribution of electricity.
- Investment projects related to roads, highways, railways and bridges infrastructure and maritime terminals and port facilities, growing telecommunications networks, public safety and prisons’ facilities, drinking water, drainage and sewerage.
The exploration and exploitation of hydrocarbons are not included in the fiber E. These activities concern the Round One.
The main risks of this financial instrument are the increasing pressure on the fall in oil prices, hydrocarbons directly related to the fiber E; the exchange rate and assets that may invest are varied and different from each other, plus they have different durations and different future cash flows to determine their forms.