MEXICO Law and Practice Contributed by: Alejandro Stamoglou, Jesús Pérez Alcántar and Julio Jiménez Manrique, Bello, Gallardo, Bonequi y García, S.C.
tions; (ii) the submission of notices and reports to the Ministry of Finance and Public Credit ( Secretaría de Hacienda y Crédito Público ), through the SAT ( Ser- vicio de Administración Tributaria – the Mexican tax authority) portal; (iii) registration in the official regis - try of vulnerable activities; (iv) conducting risk-based assessments that allow them to identify, analyse, understand, and mitigate such risks, as well as those related to the individuals with whom they carry out transactions or acts; (v) drafting and implementing internal policy manuals that include criteria, measures and procedures to identify and monitor these transac - tions; (vi) the custody, protection and preservation of information and documentation related to the vulnera - ble activity for the legally applicable period (ten years). On the other hand, private credit fund managers should note, as outlined above, that given the increas - ing participation of Afores in the private credit market through investment vehicles known as Cerpis, such pension funds are required by the regulator to provide, among other things, quarterly financial statements and reports that comply with Institutional Limited Partners Association (ILPA) standards, as well as certain valu - ation standards. Private credit providers electing to structure their investment vehicles as trusts issuing securities (CER - PIs or CKDs) must also comply with reporting obliga - tions to the securities regulator. 2.5 Club Lending and Antitrust As it is common in other jurisdictions, private credit providers participating in syndicated loans typically negotiate the terms and conditions governing the exercise of their voting rights on material matters, including substantial amendments to key provisions such as interest rates and maturities. To date, we have not observed a particular focus by the competition authority on the private credit sector. 3. Structuring and Documentation 3.1 Common Structures In Mexico, private credit transactions commonly use structures such as trusts ( fideicomisos ) specifically
created for the purpose of granting loans to compa - nies. Additionally, depending on the volume of lending and several considerations related to the origin of the money, it is also typical to introduce a SOFOM in the structure, as they might have tax-related benefits. Following global trends, credit providers in Mexico are generally willing to offer a variety of facilities, including revolving facilities and delayed draw facilities, tailored to the specific needs of borrowers. Regarding external factors influencing deal structur - ing, the authors believe that macroeconomic con - ditions, such as volatility in reference interest rates and inflationary pressures, will continue to shape the industry. Additionally, increasingly stringent anti-mon - ey laundering regulations and enhanced supervisory measures by financial authorities, including potential sanctions for non-compliance, are expected to play a significant role in determining future structuring prac - tices. 3.2 Key Documentation The key documentation for private credit transactions in Mexico typically includes credit agreements (cover - ing term loans and revolving lines), as well as security documents such as trust agreements, non-possesso - ry pledge agreements and share pledge agreements. This set of agreements is generally negotiated by the lenders and the borrower, often with the involvement of legal counsel on both sides. While intercreditor agreements can be negotiated separately, in Mexico there is a tendency for the spe - cific terms and conditions of the transaction to be reflected in the credit agreement itself. “First out – last out” transactions are not standard in the Mexican market; however, when they do occur, the relevant terms and conditions are typically included in the credit agreement rather than in separate agree - ments among lenders. Finally, regarding external factors causing changes, the reform of the judiciary is worth mentioning, which is making lenders strengthen their execution pro - cesses by requesting some additional steps in con - tracts, as well as hedging agreements due to some
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