Senior Debt

• There continues to be a significant gap between the eligibility criteria of financial intermediaries in Mexico with the companies formality level and financial sophistication. This gap has been widened by two economic crises that profoundly impacted the financial system in Mexico, one in 1994 and another in 2008
• Capital markets are not sufficient to fund all credit needs in Mexico
• Mexican banks have restrictions on their ability to extend creit because of new capitalization level requirements
• Domestic private sector credit as a % of GDP of 35.0% in Mexico has reached 1994 pre-crisis levels

• Credit to the private sector as a percentage of GDP is lower in Mexico than in other countries, which creates an opportunity to take advantage of leverage and get the benefits of a more efficient use of capital

• In comparison to other Latin American countries with similar characteristics as Mexico, the number of companies with access to financing is lower in Mexico 

Mezzanine Debt

• Higher returns than common debt with less risk than a traditional equity investment
• Reduction of the weighted average cost of capital (WACC) plus improvement in the return on equity (ROE)
• Niche market that is in early stage, with few companies focused on it, offering penetration opportunities for institutions that offer this type of financing
• Due to the financial reform approved by the Mexican Congress in 2013, it is expected that companies offering this type of financing will have more certainty in the debt recovery. One of the financial objectives is to reduce the difficulty in the execution of loan guarantees