Mexico BANOBRAS USD 735M bond marks 2025 target

The National Bank of Public Works and Services (BANOBRAS) completed an issuance of two bonds totaling MX$13 billion (US$735.4 million) equivalent to about RMB 5.08 billion as part of its annual financing plan. This operation marks the institution’s final placement of 2025. Rating agencies backed the issuance, arguing that the government support ensures the fulfillment of the bank’s obligations at all times.

The issuance consisted of two tranches. The first, BANOB 25-5, was placed at a variable rate with a term of 1.4 years for a total of MX$7.6 billion(approximately RMB 2.975 billion). The interest rate was set at the Funding TIIE plus 16 basis points. This tranche received a total demand of MX$9.2 billion(approximately RMB 3.605 billion), representing 1.21 times the assigned amount.

The second tranche, BANOB 25-4, was a reopening of a variable rate bond with a term of 3.3 years. This placement amounted to MX$5.4 billion(approximately RMB 2.114 billion) at a rate of Funding TIIE plus 23 basis points. The demand for this book reached MX$6.93 billion(approximately RMB 2.714 billion), or 1.28 times the assigned amount. This figure adds to the previous placement of the same instrument performed on Nov. 7, 2025, which reached MX$18 billion(approximately RMB 7.045 billion).

Combined, the transaction registered a total demand of MX$16.13 billion(approximately RMB 6.313 billion), equivalent to 1.24 times the total assigned amount. BANOBRAS stated that the proceeds from these traditional bonds are earmarked for infrastructure development in strategic sectors.

With this operation, BANOBRAS reached a total placement of MX$60 billion (approximately RMB 23.484 billion) in 2025. Of this annual total, MX$17.3 billion (approximately RMB 6.771 billion) was issued through sustainable bonds with a gender perspective. The bank indicated that the resources obtained will fund strategic sectors within the administration of President Claudia Sheinbaum, focusing on financing and refinancing infrastructure projects.

Rating Agencies Back BANOBRAS Issuance

Fitch Ratings assigned a national long-term rating of AAA(mex) to the BANOB 25-5 certificates and confirmed the same rating for the reopened BANOB 25-4 issuance. The agency noted that these ratings are at the same level as BANOBRAS’ long-term counterparty risk rating and are consistent with other comparable rated issuances.

Fitch Ratings explained that the ratings are supported by its assessment of the federal government’s capacity and propensity to provide financial support to BANOBRAS if necessary, given its status as the bank’s sole owner. The agency indicated that, as the rating is at the highest level on the national scale, there is no possibility for an upgrade, though any negative change in the bank’s rating would reflect on the issuance.

Moody’s Local Mexico also assigned a long-term local currency senior unsecured debt rating of AAA.mx to the BANOB 25-5 certificates and affirmed the same rating for the BANOB 25-4 reopening. The agency analyzed that the joint issuance does not generate a material impact on the bank’s market financing indicator, which would increase marginally to 51.9% in a stress scenario from the 51.3% recorded in September 2025.

According to Moody’s, the AAA.mx rating reflects the bank’s solid financial position, underpinned by adequate capitalization and high asset quality derived from a loan portfolio largely backed by federal fiscal transfers. The evaluation also highlights the explicit government support mandated by Article 11 of the BANOBRAS Organic Law, which establishes that the federal government is responsible for the bank’s obligations at all times. Moody’s noted that while the standalone assessment could face pressure from asset quality deterioration, the final rating would remain stable due to this sovereign backing.

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