How the state-owned electrical utility in Mexico won over global capital markets

The energy and infrastructure real estate investment trust (REIT) (Fibra E; ticker FCFE18) from Mexico’s state-owned federal electricity commission (CFE) issued its inaugural $725 million in senior unsecured bonds last September, making it the largest issuance ever by any REIT-type vehicle in Mexico. The transaction was supported by more than 200 international investors, with oversubscription reaching nearly 10 times the original $650 million marketed value, allowing Fibra E to raise an additional $75 million upsize at a 5.875% coupon — aligned with comparable CFE sovereign debt rated BBB-.

Moreover, the transaction became the most oversubscribed by any Latin American issuer in 2025 and established a benchmark for how other power and utilities SOEs in the region can mobilize global capital toward national development objectives, prompting an important question: What enabling factors allowed Fibra E to win over global capital markets? In examining its inaugural issuance — and considering whether similar transactions could be replicated by similar SOEs in the region — four success factors emerge: selling the right story, setting the right scheme, establishing the right governance, and securing the right international backing.

Selling the right story

The past two administrations in Mexico have been defined by pendulum swing-style changes in the energy sector; their rules and their opposing constitutional reforms left private sector participation uncertain. On top of that, electricity cost increasingly became a lag for competitiveness as the country’s demand accelerated due to an industrial capacity expansion fostered by the North American nearshoring policy.

In 2024, President Claudia Sheinbaum — an environmental scientist and a contributing author of the Nobel Peace Prize awardee organization Intergovernmental Panel on Climate Change — assumed power with renewed ideas to gradually reinvent the energy sector in Mexico. Shortly after assuming office, her administration announced a target to generate 22,674 megawatts of new capacity as part of its 2025-2030 Plan for the Strengthening and Expansion of the National Electricity System, anticipating roughly one third of the required capital to come from private investors. Moreover, the CFE announced an $8.17 billion investment to build 275 new transmission lines and 524 electrical substations for the National Transmission Network (RNT) — directly aligning with CFE and Fibra E’s objective to attract private capital into strategic transmission assets. In essence, the market signaling was clear: Mexico is open to renewable and more efficient energy, and the government is actively seeking private sector collaboration to achieve it.

Setting the right scheme

The electricity markets in Mexico run with state-owned company CFE as the exclusive player in transmission and distribution. The National Center for Energy Control (CENACE) collects service payments, and that revenue flows directly into a promoted trust (PT), which then makes distributions to its rights holders — CFE and Fibra E — after accounting for operational expenses and maintenance.

In its 2018 initial public offering, Fibra E raised roughly $900 million through stock certificates to acquire 6.78% of the PT’s distribution rights, becoming the only investment vehicle with access to a share of RNT’s revenues and guaranteeing consistent cash flows to back dividend payments to investors. With its 2025 inaugural bond issuance, Fibra E acquired an additional 2.72% of the PT’s distribution rights, which allowed it to optimize its capital structure and secure capital for CFE to follow through its 2025-2030 plan.

Establishing the right governance

Governance is key to gaining institutional investor confidence. A good narrative with a sophisticated scheme can vanish without transparent rules and enforcement. In that regard, two layers of governance protect investors and maintain operational discipline within the PT and Fibra E’s ecosystem, both aligned with global institutional governance practices. On the PT’s side, the board consists of six members, including three CFE representatives and three independents with veto rights that represent Fibra E’s certificate holders. On the other hand, Fibra E has its own board with technical committees. These dual governance structures create checks and balances that ensure accountability and transparency and strengthen investor trust.

Securing the right international backing

For an emerging market (EM) transaction of this scale and nature with national development objectives and SOEs at the center, the participation of a development finance institution (DFI) that recognizes the soundness of the investment vehicle and contributes to the mitigation of perceived investment risk becomes pivotal to mobilize global private capital. In that regard, the International Finance Corporation (IFC) acted as anchor investor for Fibra E’s inaugural bond issuance through a $75 million investment, providing a strong signal of alignment with global ESG and infrastructure-governance standards and validating CFE’s plan to invest in strategic transmission assets.

Conclusion

Access to capital is usually the enabler or deterrent that aids or hampers progress on many of the structural issues surrounding EMs. Latin American countries, for instance, are generally lagging in clean and competitive energy to power both their economic activity and their innovation — a situation often attributed to SOEs and political cycles. In this context, CFE Fibra E laid out a benchmark to mobilize private investment into traditionally state-controlled sectors to fund modernization and efficiency improvements, overcoming the political mist and bridging institutional gaps.

About the author

Pedro De La Rosa MBA ’25 is an Emerging Markets Fellow at the Cornell SC Johnson College of Business covering capital markets and fintech. He is an investment banking associate at New York Bay Capital, focusing on capital raising for private transactions in Latin America. Before joining the MBA program, he was a senior economist at the Embassy of Mexico in Washington, D.C., where he promoted foreign direct investment and incentives for cross-border supply chains between the U.S. and Mexico.