- LatinFinance has recognized FEMSA as the first Latin American company to issue a bond of this type in euros.
- With this bond issuance, FEMSA refinanced its long-term debt and obtained the lowest margin recorded to date for this type of instrument by a Latin American corporate issuer
Monterrey, Nuevo Leon, Mexico. February 9, 2022. – Fomento Economico Mexicano, S.A.B. de CV (“FEMSA,” or the “Company”) (NYSE: FMX; BMV: FEMSAUBD) received the “Corporate High-Grade Bond of the Year” award from LatinFinance for its Euro-denominated sustainability-linked bond issued in April 2021 in the international capital markets.
The first tranche was for €700 in senior notes maturing in 2028, with an interest rate of 70 basis points above the reference rate for a yield of 0.551%, in addition to another tranche of €500 million in senior notes due in 2033, with an interest rate of 88 basis points above the reference rate for a yield of 1.068%.
During the announcement of the 2021 Deal of the Year Awards, LatinFinance mentioned that these financing transactions allowed FEMSA to finance its debt and achieve the lowest coupon and margin to date by a Latin American corporate issuer.
In addition, LatinFinance said FEMSA had become the first Mexican company to issue a Sustainability-Linked Bond and the first Latin American company to denominate it in euros. Furthermore, the placement was backed by 196 international institutional investors, and the demand exceeded the issued amount by 1.9 times.
“This was an issuance that, by any metric, has broken all records for issued amount, price, and market performance. FEMSA has been working for several years to become a company with ESG (Environmental, Social, Governance) principles, and this bond is a reflection of it,” said José Manuel Olguin Sepúlveda, FEMSA’s corporate treasurer.
LatinFinance stated that the 7-year bond (€700 million) requires FEMSA to prevent 65% of its operational waste from reaching landfills, while guaranteeing that 65% of its power used comes from renewable sources by 2025. If FEMSA missed the target, interest rates would increase 25 basis points the following year.
The 12-year bond (€500 million) requires the Company to reduce to zero its operational waste going to landfills, while guaranteeing that 85% of its power used comes from renewable sources by 2030. The same 25-basis point increase applies in case FEMSA misses the target.
FEMSA adopted and published a Sustainability-Linked Bond Framework to issue the bond in April 2021. The Framework was prepared in accordance with the 2020 Sustainability-Linked Bond Principles (“SLBP”) regulated by the International Capital Market Association.
FEMSA has committed to publishing annually on its website, in its Annual Sustainability Report, an update on the Sustainability-Linked Bonus, including updated information regarding Key Performance Indicators.
The Sustainability-Linked Bond Framework and the independent opinion are available at https://femsa.gcs-web.com/es/sustainable-finance
FEMSA is a company that generates economic and social value through companies and institutions and seeks to be the best employer and neighbor of the communities where it operates. It participates in retail trade through FEMSA Comercio, which comprises the Proximity Division, of which OXXO, a small-format store chain, is part; a Health Division that includes drugstores and related activities; and a Fuels Division that operates the OXXO Gas service station chain. Coca-Cola FEMSA participates in the beverage industry, the world’s largest bottler of Coca-Cola products by sales volume; and in the beer sector, as the second-largest shareholder in HEINEKEN, one of the world’s leading beer companies with operations in more than seventy countries. FEMSA also participates in the logistics and distribution industry through FEMSA Strategic Businesses, which additionally provides refrigeration solutions at point-of-sale and plastic solutions to its companies and external clients. Through its Business Units it employs more than 320,000 collaborators in thirteen countries. FEMSA is a member of the MILA Pacific Alliance Sustainability Index of the Dow Jones, the FTSE4Good Emerging Index, and the Sustainable IPC of the Mexican Stock Exchange, among other indices that evaluate its sustainability performance.