IFLR 1000
The Guide to the World's Leading Financial Law Firms

Mexico's economy grew by 5% in 2010, driven by increased manufacturing and exports, after a 6.9% drop in 2009. One attorney says: "It's exciting to see a much higher level of activity in both debt and equity in 2010." Another confirms this view: "The IPO market in Mexico has been busier in the last 12 months than in the last 10 years."

Mexican banks and corporations made large investments abroad last year, selling $21 billion in debt, possibly to hedge against losses related to the peso's 18% drop in 2009. Also, because of lack of liquidity following the 2008 financial crisis, one lawyer says, "United States banks have stopped financings in Mexico, and now Mexican buyers are turning to Mexican banks for loans."

The most interesting development in the capital markets space has been the continuing evolution of CKDs, or certificados de capital de desarrollo. Introduced into the financial system in 2009, the CKD is a new kind of security that was created to allow Mexican pension funds to invest in infrastructure, real estate, and private equity funds, through publicly-issued trusts listed on the Mexican Stock Exchange. CKDs are the only type of security pension funds can invest in, and they can only be used to finance Mexican companies or projects based in Mexico.

The instrument has been enthusiastically taken up so far and as of the spring of 2011, one attorney notes: "$3 billion has been raised through investments by these funds. There should be at least $10 billion out there ready to be invested." However, because this is largely unchartered territory, he adds, "It's no small task to figure out the right way to do this." Another peer says: "The pool of money for private equity deals is not limited to international companies with a Mexican presence any more."

Mexico's national infrastructure fund, Fonadin (Fondo Nacional de Infraestructura), has received mixed reactions. Fonadin was created by President Felipe Calderón in 2008 to drive investment in the country's infrastructure projects, create jobs and bolster the economy. One attorney comments, "This year we're reaping the fruits of the government infrastructure program launched in 2008 after the crisis. More and more non-Mexican banks are coming back to the market, interested in financing infrastructure and energy projects. Commercial banks are taking a more aggressive role." Another lawyer was less enthusiastic: "The infrastructure plan of the Mexican government has not been as successful as they thought. They're not as successful in big highways, toll roads, but have been able to move along on the smaller projects." The reconstruction phase of the Desarrollos Carreteros del Estado de Durango roads project, in the state of Durango, was completed last year, involving ten toll-free stretches of highway.

With Mexico's need for energy growing by between 5 and 6% per year, based on increases in population and development, the Secretary of Energy Georgina Kessel issued the National Energy Strategy in 2010. By 2024, the plan seeks to achieve 100% hydrocarbon reserve replacement, 3.3 million barrels of oil production per day and the use of renewable energy sources for 35% of power generation. Ongoing projects include completing construction on the the La Yesca hydroelectric dam, and beginning construction of the La Venta III and IV wind turbine farms.

In January 2011, the Comisión Federal de Electricidad (Electricity commission) announced that one of the country's largest infrastructure projects, the Manzanillo Liquified Natural Gas (LNG) Terminal in Colima State, would begin operations in September. It will be Mexico's third-largest terminal and will supply power stations in the Western side of the country.

Despite improvements, Mexico's challenges remain substantial, including the need for modernised labour laws and increased competitiveness in the energy sector. Inflation is a concern, though it is currently at 4%, as is unemployment, which is at 5%, and violence associated with the drug cartels in the northeast continues to plague the country. One attorney offers his take: "Until we have substantive reform in the areas of energy and labour, Mexico can't be the flavour of the month for many decades."

The banking and finance department of Baker & McKenzie's Mexico office is led by the hands-on Alejandro Sepúlveda, and along with Daniel Antillón, he was the most active partner in the firm's big ticket finance deals. The capital markets proved a flat year for the firm as for many across the market.

A great majority of the firm's deals are cloaked in confidentiality however two deals give a flavour to the kind of work that has kept it busy. In one, Rafael Gómez Vicencio led a large team to represent Mexican consumer lender Crediamigo as borrower of an asset-backed structured syndicated financing. The deal secured a large loan of $100 million, involved a number of parties and counsel in various jurisdictions and was undertaken in Mexican and US law. A complicated business, it closed in autumn 2010.

A second smaller deal saw Antillón and team advise Banamex USA as it agreed term loan and revolving facilities with a confidential company to finance the acquisition of name brands and IP rights of a popular beverage. The facilities granted in July 2010 totalled $20 million.

The remaining confidential deals had a high proportion of refinancings and restructurings, interestingly for national rather than US banks, in the gap left by the latter's inactivity.

Bello Gallardo Bonequi y García had a strong year in banking, winning instructions from clients including RBS, ING Bank, HSBC and Bank of Tokyo Mitsubishi, among others, while in project finance it got mandates by clients including the International Finance Corporation (IFC).

One of the most lucrative relationships for the firm has been Roberto Garcia-Pantoja's role as a regular counsel to HSBC Mexico, which throughout last year saw him advise on deals totalling $500 million.

Garcia-Pantoja was busy through the year, and especially in 2011, on continuing transactions for RBS and Banco Actinver while he was also engaged by Banco del Bajio in June 2010 to provide advice on regulatory matters.

The firm closed a number of solid financings and there were some notables among them. The other ever-present partner Miguel Gallardo-Guerra represented Bank of Tokyo-Mitsubishi on a $30 million loan to Arnecom in August 2010 and in September 2010 on a second $30 million loan to Falcon Holdings. The bank, already the biggest Japanese bank in Mexico, has been increasing its activities in the country recently and this might well pay dividends to the firm.

Garcia-Pantoja and Gallardo-Guerra also brought in projects deals and in particular the IFC engaged Garcia-Pantoja on two transactions: a $13 million loan to Crédito Real to be directed toward the microfinance sector, and a second $20 million loan to Banco Compartamos, again to provide funds for microfinance.

Senior associate Margarita Arizmendi joined the banking team in 2011.

Creel García-Cuéllar Aiza y Enríquez is widely recognised for its expertise in banking, capital markets and project finance. The firm has participated in some of Mexico's most innovative transactions over the years. Most recently, it was involved in developing the new certificados de capital de desarrollo, or CKDs, which were introduced to the market in 2009. It was subsequently involved in ten of the 12 CKD-related transactions that came to market by mid-2011. One long-term client refers to Creel's attorneys as "responsive, informed and experienced".

The firm also acted on the country's largest IPO in 16 years: Partner Carlos Aiza advised Casa de Bolsa BBVA Bancomer, Casa de Bolsa Santander, Credit Suisse Securities and UBS Securities on a $881 million global stock offering in November 2010, for the transportation infrastructure company OHL Concesiones Mexico. The company, a subsidiary of the Spanish construction company, Obrascon Huarte Lain, will use the money for expansion and infrastructure projects.

Since 2008, the Mexican government has put a focus on infrastructure through reforms and new legislation. The firm has benefitted from aligning itself with this market. Last year Santiago Sepúlveda advised the borrower Abengoa Cogeneración Tabasco in a complex $460 million project financing for the development and financing of a facility in the Nuevo Pemex gas processing plant in Tabasco. The Nuevo Pemex Cogeneration Project will allow the transformation of natural gas and water into steam and electricity.

Forasteri Abogados had a good year last year in the Mexican equity capital markets. It also handles debt capital markets, banking and finance, however these areas proved a bit more elusive.

Partner Díaz de Cossío kept the equity deals coming in and in one mandate, which marked only the second IPO in Mexico following the financial crisis, he led a team to advise Corporación Actinver, the holding company of a bank, broker and the largest independent asset manager in Mexico, on its listing on the Mexican Stock Exchange. The IPO was also the first for a number of years from a financial services company and was completed in May 2010.

Connected with the above deal, de Cossío, along with newly recruited associate Verónica Peña, assisted securities dealer Actinver Casa de Bolsa on establishing a programme for the issuance of warrants, which was interesting for being only the fifth of its kind by such a company. The programme worth $85 million was established in December 2010.

Another equity deal in January 2011 saw de Cossío advise Grupo Carso as its spun-off mining and real estate subsidiaries listed on the Mexican Stock Exchange.

Young up-and-coming associate Gonzáles de Cossío also managed to lead on one highlight transaction, where he advised Grupo Sports World on an IPO on the national stock exchange worth $66 million. Notably, the Group listed over 50% of its outstanding shares in August 2010.

Galicia Abogados advises on all aspects of banking and finance to a wide variety of international as well as domestic financial institutions, and emphasises its close relationship with the Spanish firm Uría Menéndez. The firm's project finance team draws on its vast experience encompassing infrastructure, power, oil and gas, petrochemical, toll-roads and water treatment plants.

One ten-year corporate banking and acquisition finance client calls its lawyers, "superb, with thorough knowledge of Mexican banking law, Mexican clients and cross-border transactions". A competitor says: "They're known for representing banks."

In three issuances of senior secured notes by Conti-Gummi Finance, partner Arturo Perdomo advised Citigroup Global Markets and RBS, as underwriters. Conti-Gummi's parent company, Continental, a worldwide supplier of automotive parts, served as guarantor. The notes, valued at $1.06 billion, $1.42 billion and $1.78 billion, were issued in the summer and autumn of 2010.

The firm also advised the Japan Bank for International Cooperation in a $600 million loan to Pemex, Mexico's state-owned oil company, for the development of oil fields located in Chicontopec Basin. Although Chicontopec contains Mexico's largest reserves of hydrocarbons, output has been disappointing primarily because of the predominance of very crude oil requiring a lot of refining. Pemex has estimated that it will take $30 billion over a period of 15 years to fully develop the area. The deal closed in August 2010.

Goodrich Riquelme y Asociados closed a good number of deals in banking, finance and the capital markets last year but it was kept especially busy with financing mandates thanks to partner Jorge Sánchez.

Sánchez brought two interesting transactions to close in March 2011 despite the uncertain business environment. The first was for Phoenix Capital and Phoenix Packaging de México, which the firm helped secure a syndicated loan agreement with Citigroup Global Markets and JPMorgan Securities. The two US finance houses made a pool of $80 million available to three companies, including Phoenix, in what was a relatively complex cross-border deal.

The second was for Trafigura Beheer, where the firm advised its subsidiary Cormin on a $200 million secured loan from BNP Paribas to finance the company's non-ferrous concentrates purchases from third party suppliers. However, possibly one of the firm's highlights was still ongoing. The firm advised a confidential global technologies company on a secured lending agreement for over $100 million to allow the company to purchase network equipment and provide a telecom service.

Not to mislead, the firm also won mandates from lenders, among them a large development finance institution.

Sánchez was again ubiquitous on the project finance side. In one deal, he led a team which included José Antonio Butron Quintero to advise the Mexican subsidiary of a global holding company on the financing for the development of one of the largest and most important mining concessions in the country for iron ore. The project will be the largest iron ore project in Michoacán and, though still ongoing, financing of $100 million was expected.

The firm has a large waste water project on the horizon.

Formerly Jáuregui Navarrete y Nader, the firm has changed its name following the departure of ten of its top partners, including lead partner Michell Nader Schekaiban and lead partners Yves Hayaux-du-Tilly and Hans Goebel, the three formed Nader Hayaux & Goebel.

While the departures are no doubt a big blow for the firm, the team has built a good track record in the past year with some big clients. It represented Moody's in a securitisation transaction of RMBS worth $2.27 billion by the Mexican Workers Housing Institute in December 2010 and in August acted for Prudential Real Estate Investors on a $234 million issuance of structured notes onto the Mexican market.

The firm had a good year in equity and acted for Bulltick Casa de Bolsa as placement agent on the $60 million IPO of Proteak Uno, the first green company ever to list and only the third IPO since the financial crisis hit. Other clients included Banco Azteca and Navix de Mexico, but one deal worth detailing saw the firm represent the Mexican government on the issuance on the domestic market of fixed rate Series A and Series B long-term amortizing bonds worth $307 million.

In project finance the firm won one highlight mandate, which saw Miguel Jáuregui led a team to advise Isolux Corsán Concesiones through its bidding process for the Noreste 1 federal toll roads and bridges concessions from the Ministry of Communications and Transport.

A competitor notes, "They are a good firm, but I only see them once in a while."

However, one long-term client praises the work of Miguel Jáuregui: "He always provides a creative strategy based on his impressive experience." Another client compliments the firm on its lawyers' technical expertise: "I think it's one of their main strengths," he says. "They do a lot of background research and work on very complex public-private partnership (PPP) deals. There are lawyers who would charge you less, but would be a lot more expensive when you have problems later."

In September 2010, the firm advised a syndicate of lenders including The Export-Import Bank of the United States, the Export Development Canada, and The Korea Development Bank on a $759 million loan to Minera y Metalúrgica del Boleo for the development of a poly metallic mine in Baja, California.

Kuri Breña Sanchez Ugarte y Aznar closed with a solid year after starting 2010 with a flurry of big mandates, before the IFLR1000 research period. Its most lucrative area once it got going was in the relatively quiet capital markets, where the firm handled a series of debt issuances and securitisations.

However the firm got going in July 2010 with a mandate for a large project financing which had borne fruit by the end of the year. Partners Bernardo Luna and Alejandro Sobarzo closed the financing for the Mexican Development Banks, which agreed a $400 million facility to Chrysler Mexico in order to build a plant and manufacture the new Fiat500. The car went into production at the end of 2010.

The above deal also shows that the firm benefitted from the current trend in Mexico of increasing activity in car manufacturing.

In August 2010, Daniel Kuri Breña closed a deal for Pochteca, which owns subsidiaries Pochteca Paperia and Pochteca Materias Primas, for a securitisation of trade receivables worth $26 million. The firm structured the negotiations and handled the documents.

Partner Luis Octavio Nuñez and Alfredo Gómez Pérez then closed another interesting deal in March 2011, advising Vinte Viviendas Integrales on a bond issuance of $83 million along with a Partial Credit Guarantee (PGC) by the International Financial Corporation (IFC).

In mid-2011, partner Guillermo Garay was also busy representing PACCAR Financial on a $454 million issuance of short term notes. The issuance will be made under a placement programmes.

López Velarde Heftye y Soria is known as an innovator in project finance deal structuring and has strong regulatory expertise. The firm represents both lenders and sponsors, public utilities and government entities.

In a $730 million deal that closed in December 2010, the firm advised the sponsors, Mitsui and Tokyo Gas, indirectly through the borrower, MT Falcon Holdings, and each independent power producer (IPP) as co-borrowers, on the acquisition financing for the purchase of five power plants from Gas Natural-Fenosa. The IPP model was first implemented in 1997 and as of 2010 was responsible for more than $25 billion of domestic investment in the country.

In March 2011, the firm advised the Korean export-import bank K-Exim, Japan's Sumitomo Mitsui Banking Corp (SMBC) and the French bank, Credit Agricole, on a $325 million project financing for a 430MW thermoelectric Norte II IPP plant. It was the first IPP deal that involved both Korean developers and lenders.

Many of the attorneys at Mijares Angoitia Cortés y Fuentes have worked in the public sector, industrial companies or finance giving them vital experience in different sectors. A client who has been with the firm for a decade describes its attorneys as "very professional and committed". Another adds, "the quality of their advice makes them the best lawyers in Mexico".

Partner José Raz Guzmán represented Goldman Sachs last year as the purchaser of $120 million of 9.25% notes, issued by Ixe Banco, Institución de Banca Multiple and Ixe Grupo Financiero. In October 2010 Guzmán also represented Artha Operadora in the issuance of trust certificates set up with the Bank of New York Mellon, representing indirect participation of $206 million of Artha Controladora capital stock.

Partner Horacio de Uriarté represented the transportation infrastructure company OHL on financings for two highway projects closing in December 2010, one for $200 million and one for $55 million. The first was for new phases of construction of Circuito Exterior Mexiquense Highway and the second was in connection with the Libramiento Norte Puebla Highway Project.

In 2011, after two decades at the firm, James Ritch, grandson of the firm's founding partner, retired. Partner Ricardo Gomez Palacio also left the firm one month later.

Nevertheless, Ritch Mueller retains some of Mexico's most highly-regarded attorneys. One competitor says of name partner Thomas Mueller-Gastell: "He is the dean of project finance in Mexico. He took project finance when there was nothing in Mexico and worked it." Luis Nicolau is also singled out for praise: "He has had a very good reputation for many years. He's active, extremely hard working and responsible." A client remarks, "He's got it all going for him."

Clients also spoke well of the firm's international scope. "They were able to put us in touch with the best law firms in the relevant countries," one notes. "They have good international experience."

In one high-profile transaction, Nicolau represented the underwriters in Arcos Dorados Holding's IPO on the NYSE in April 2011, which seeks to raise $1 billion. Arcos Dorados Holdings is McDonald's largest franchise, with exclusive rights for Latin America and the Caribbean.

And in a deal that closed in March 2010, Nicolau represented BCP Securities as arranger and dealer, and the brokerage firm GBM as dealer, in the establishment of a Mexican microfinance company's $300 million note program. The notes were listed on the Luxembourg Stock Exchange and the exchange's alternative market, the Euro Multilateral Trading Facility.

On the project finance side, James Ritch advised the lenders in the $375 million financing of a 250MW wind farm located in Oaxaca State in southeast Mexico, called Eurus. It is the largest wind power generation facility in Mexico, and will supply electric power to roughly 25% of Mexico's cement manufacturers, reducing carbon dioxide emissions by 600,000 tons annually.

Santamarina y Steta lost five associates between June 2010 and February 2011 but it held on to its senior members and finally had a strong 12 months, see a healthy turnover of transactions in banking and financing, while the capital markets proved quite flat.

Juan Carlos Machorro heads up the banking and finance and project finance and energy departments and he led most of the big financings often with the support of Ricardo Orea.

In mid-2011, the pair was advising on a series of loans a securities packages for one of their most regular client, DEG (Deutsche Investitions- und Entwicklungsgesellschaft). Due to their ongoing status the nature of the deals was confidential but they are substantial. In one public deal for DEG the pair helped the bank disburse a loan to Adium Pharma, one of Latin America's biggest pharmaceutical companies, to fund expansion. The loan agreed was for $10 million and it successfully concluded in August 2010.

A deal which can be mentioned saw the pair advise Wells Fargo Bank alongside Winston & Strawn in a loan to Printpack Holdings and Empaques Printpack de Mexico signed off in March 2011. At $350 million it is one of the biggest loans to be granted by the US bank in recent years.

The pair also won some interesting project finance deals. Possibly the firm's biggest project financing saw Machorro and Orea represent the project developers to construct and operate a co-generation steam energy facility to furnish Petróleos Mexicanos (Pemex), the decentralised public oil company and one of the largest in the world. The project involves financing totalling $600 million.

Sergio Chagoya and Bernardo Reyes Retana also handled one of the most lucrative mandates, advising Export Development Canada (EDC) on a credit agreement with Pemex. The loan was for $500 million and was agreed in September 2010.

The firm's biggest role however saw the firm front a large team to advise the Controladora Comercial Mexicana (CCM). The CCM had allegedly defaulted on payment obligations in 2008 under a number of foreign and national ISDA master agreements, commercial loans and bonds with claims totaling $3.3 billion. The firm helped the CCM restructure debts of $1.6 billion.