Stephen Lacey is US Editor for International Financing Review, helping to oversee editorial content across the region. He has particular expertise in coverage of the equity capital markets – IPOs, follow-on stock sales, and equity-linked securities – spanning the entire corporate life cycle, from venture and private equity to entry and maturation in the public markets.
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Master limited partnerships almost universally comprise a complex web of corporate structures. At the bottom is the MLP itself, controlled by a traditionally structured tax-paying corporate as general partner of the MLP – sometimes the general partnership interest is itself floated as a separate public company.
While leveraged vehicles such as mortgage REITs and BDCs are commonplace in the US, they are virtually non-existent in Mexico. But residential mortgage REIT Concentradora Hipotecaria SAPI, known as FHipo, is set to change this and is drawing strong investor attention to its US$600m IPO. Through what appears modest leverage – 0.5–2x equity – the vehicle is targeting a low to mid-double-digit annual yield.
High-yielding equities are either symptomatic of perceived operational risks, leverage, or both. While levered vehicles such as mortgage REITs and BDCs are commonplace in the US, they are virtually non-existent in Mexico.