MEXICO Law and Practice Contributed by: Julián J. Garza Castañeda and Paulina Bracamontes Belmonte, Nader Hayaux & Goebel
The current administration in the United States has particularly focused on international security affairs, which has resulted in stricter regulations and sanc- tions that have impacted the international financial markets, including with respect to anti-money laun- dering and other compliance-related matters. 1.3 The High-Yield Market High-yield transactions will always offer structuring challenges and complex collateral structures, particu- larly with regard to project finance transactions, where structuring and risk assessment is so dependent on prospect valuations and a number of additional con- siderations, including ratings from rating agencies. More often than not, innovation helps to establish adequate legal and financing structures that may accommodate market needs. 1.4 Alternative Credit Providers The lender market continues to be diversified in Mex- ico. Non-bank institutions have taken a leading role in financing sectors of the economy that are not fully served by the traditional banking industry. Sociedades Financieras de Objeto Múltiple , Sociedades Financi- eras Populares and a large number of new fintech- related lenders are active in the market; many of them receive funding from traditional banking sources. Dur- ing 2023 and 2024, multiple companies requested authorisation from the National Banking and Securi- ties Commission to incorporate and organise Mexican banking institutions and sociedades financieras popu - lares , which represent the most traditional sectors of credit providers. In the alternative credit provider sector, fintechs in the consumer lending business represent approximately a third of the Mexican fintech market. Initially operat- ing without a comprehensive regulatory framework, these entities are now subject to specific regulations designed to instil consumer confidence. Fintech companies have been a transformative force in Mexico’s lending market, primarily due to their inno- vative use of technology and adoption of new busi- ness models. Their influence is particularly evident in several key processes:
• prospective client selection; • implementation of compliance measures (espe- cially KYC); • risk assessment; • fund disbursement; • digital assets and products; and • determination of rates and payment terms. The disruptive influence of fintech companies in the lending market has opened up new avenues for potential borrowers, particularly those keen on financ- ing digital products and services. 1.5 Banking and Finance Techniques As mentioned in 1.4 Alternative Credit Providers , banking and finance techniques are primarily adjust- ing to technological means that allow faster and more secure transactions. 1.6 ESG/Sustainability-Linked Lending ESG lending continues to be prominent in the Mexican lending market. Banks remain interested in loans that incorporate ESG elements and strive to comply with all the associated requirements. At the same time, the bond market is also growing extensively in the area of green and sustainable bonds. Over the past year, the number of ESG-related transactions has continued to grow. For example, the disclosure of ESG information and adherence to the recommendations of multiple agencies, such as the Task Force on Climate-related Financial Disclosures and the Sustainability Account- ing Standards Board, have been broadly promoted. However, in most cases, compliance with such rec- ommendations remains optional. Over the last few years, ESG criteria continued to gain prominence in the private sector, with the aim of assuring investors that Mexican companies are imple- menting robust ESG practices. ESG or sustainability- linked lending has particularly gained traction in infra- structure, real estate, and industrial projects.
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