Mirec 2016_PPA Dollar vs. Peso_Presentation_Caaapital
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Energy Power Purchase Agreements in Mexico. Outlines the benefits, advantages & limitations of Peso and Dollar based PPA's in Mexico
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Mirec 2016_PPA Dollar vs. Peso_Presentation_Caaapital
- 1. MIREC Week 2016 Hilton hotel, Mexico City www.caaapital.com Franco Capurro Chief Executive
- 4. FIRST, MOST BANKS HAVE PESOS OR DOLLARS? www.caaapital.com
- 6. DEBT IN DOLLARS: MORE & CHEAPER www.caaapital.com
- 7. INTEREST RATE USD: LIBOR + 2% = 3% www.caaapital.com
- 8. INTEREST RATE PESOS: TIE + 3.5% = 7% www.caaapital.com
- 10. ( THE SAME APPLIES TO EQUITY ) www.caaapital.com
- 11. WHY MOST PPA’s ARE IN PESOS? www.caaapital.com
- 12. MOST MEXICAN COMPANIES HAVE REVENUE IN PESOS www.caaapital.com
- 13. DEBT & PPA, SHOULD BE IN THE SAME CURRENCY www.caaapital.comwww.caaapital.com
- 15. UNDER SELF-SUPPLY SYSTEM MOST PPA’s WERE IN PESOS www.caaapital.com
- 16. FINANCING LIMITED TO: MEX. DEV. BANKS COMM. BANK (BANORTE). FEW INTERNATIONAL BANKS WITH ACCESS TO PESO www.caaapital.com
- 17. EXCEPTIONS: 1. COMPANIES WITH REVENUE IN DOLLARS, COULD SIGN DOLLAR PPA’s www.caaapital.com
- 18. EXEPTIONS: 2. USD PPAS SIGNED BY LARGE MULTINATIONAL COMPANIES i.e. Eurus in Oaxaca & La Bufa in Zacatecas
- 19. EVOLUTION: UNDER MEXICO’S NEW REGIME
- 20. OPTIONS: 1. PRIVATE PPA 2. AUCTION (USD OR PESO PPA)
- 21. Let’s Not forget bilateral PPA’s in pesos
- 22. Because most projects will not win the CFE auction (Only 16 of 81 projects won in the 1st Auction)
- 23. Using private pesos PPA’s can offer important advantages…
- 24. Using Mexican law generates lower legal fees & faster closing
- 25. Banobras can commit to large amounts of debt on its own & syndicate later
- 26. & probably offer higher returns than via the Auction
- 27. In the Auction, USD PPA is the WINNER
- 28. But in the private market, Peso PPA Is WINS (if you can get a PPA)
Editor's Notes
- Tenet Debt to a project and its PPA should be in the same currency Most PPAs under Self-Supply system are in Mexican pesos Peso project financing limited to Mexican development banks, a commercial bank (BANORTE), few international banks with access to MXP Hence primarily MXP debt Exceptions Tariff or capacity payments pegged to oil or gas prices, hence some USD debt in the mix OK USD PPAs signed by large multinational companies (Ex. CEMEX - Acciona’s Eurus project in Oaxaca, Volkswagen – La Bufa project in Zacatecas) Company’s revenues and expenses should be matched in currency Company’s earnings from exports in hard currency might benefit from USD PPAs Benefits Open financing to more banks than under a Peso PPA Reduced cost of financing
- Company’s earnings from exports in hard currency might benefit from USD PPAs
- USD PPAs signed by large multinational companies (Ex. CEMEX - Acciona’s Eurus project in Oaxaca, Volkswagen – La Bufa project in Zacatecas)