Holland & Knight Advises Banco Multiva on $28 Million Loan to Mexican State of Chihuahua
MEXICO CITY (December 23, 2021) – Holland & Knight Partner Alejandro Landa Thierry and Associate Gerardo Rotzinger Rodríguez recently advised Banco Multiva on three loans to the Mexican State of Chihuahua through the Ministry of Finance for an aggregate amount of MXN$600 million (approximately US$28 million). The transactions closed on Dec. 8.
Banco Multiva was selected as lender to the State of Chihuahua through a competitive bidding process that involved six Mexican Financial Institutions that offered a combined MXN$1,150 million (approximately US$50 million). The purpose of the loans is to cover short-term needs and have liquidity.
In October the Chamber of Representatives (Cámara de Diputados) in Mexico presented an initiative for a possible reform to the Law of Financial Discipline of the States and Municipalities (Ley de Disciplina Financiera de las Entidades Federativas y de los Municipios) that is currently being discussed. The reform will likely include a limit of .25% of additional expenses and contingent additional expenses. It will also require that such expenses be included in the total financing cost and redefine the best market conditions for the States or Municipalities. If the reform is passed, it is likely that financial institutions will need to raise their interest rates and may be less willing to participate in public financing in the future.