Structuring a lending transaction


Who are the active providers of secured finance in your jurisdiction (eg, international banks, local banks or non-bank financial institutions)?

There are several active providers of secured finance in Mexico, the most relevant of which are:

  • international and local commercial banks;
  • non-bank financial institutions;
  • private equity and venture capital funds;
  • government development banks;
  • financial development entities; and
  • financial technology (fintech) companies.

Is well-established market-standard facility documentation used in your jurisdiction for secured lending transactions?

Yes, market-standard facility documentation is used in Mexico for secured lending transactions. Standard documentation to structure a secured lending includes:

  • administration and source of payment trusts;
  • non-possessory pledges;
  • pledge over stock; and
  • corporate guarantors.


Are syndicated secured loan facilities typical in your jurisdiction?

Syndicated secured loans are typical for large transactions.

How are syndicated facilities normally structured? Does the law in your jurisdiction allow a facility agent to be appointed to act on behalf of other banking syndicate members?

Syndicated loans are typically made by two or more banks which jointly agree to provide a loan to a borrower. Generally, each syndicate member has a separate claim with the borrower. However, this is not always the case, and a single loan agreement contract can consolidate the debt into one claim.

Even though it is not expressly regulated by Mexican law, it is common practice to appoint a facility agent to represent the interests of the syndicated lenders against the borrowers. These kinds of appointment are recognised by Mexican courts. This also applies to loan securities derived from a public offer. The most efficient way to document this is by having the bank syndicate grant a power of attorney to the facility agent. 

In the case of a court procedure in which the syndicated members need to file a joint lawsuit, it is necessary to appoint a representative among them to continue with the procedure.

Does the law in your jurisdiction allow security and guarantees to be held on trust by a security trustee for the benefit of the banking syndicate?

Yes, the incorporation of a guarantee trust is one of the most common ways to secure a loan. To do this, a bank syndicate is appointed as beneficiary under the trust and the trustee may commence an out-of-court procedure to execute the collateral if the borrower does not comply with its payment obligations. This out-of-court procedure is agreed on by the parties when setting up the loan facility.

Special purpose vehicle financing

Is it common in secured finance transactions for special purpose vehicles (SPVs) to be used to hold the assets being financed? Would security generally be given over the shares in the SPV or would lenders require direct asset security?

Yes, SPVs are a common mechanism to hold the assets that are being financed. The typical structure of an SPV is a guarantee and an administration trust in which the lender is appointed as the first beneficiary. Security over the shares of an SPV is more common in project finance transactions when the SPV is structured as a corporation and the direct asset security (under an administration and guarantee trust) is used for the assets being financed.


Is interest most commonly calculated by reference to a bank base rate or a market standard variable reference rate (eg, LIBOR, EURIBOR or HIBOR)? If the latter, which is the most commonly used reference rate in your jurisdiction?

The LIBOR rate tends to be the most popular.

Are there any regulatory restrictions on the rate of interest that can be charged on bank loans?

Interest rates are subject to usury restrictions. Pursuant to the courts’ criteria, an interest rate is usurious when it is notoriously excessive. To determine whether an interest rate is at risk of being usurious, the courts analyse:

  • the interest rates used by the banking institutions in similar transactions;
  • the type of relationship between the parties;
  • the parties to the transaction and whether the lender is a regulated institution;
  • the loan amount;
  • the loan term;
  • the guarantees granted;
  • the inflation rate;
  • the market conditions; and
  • any other similar conditions.

If the court determines that an interest rate is usurious, it has the authority to decrease the rate to an amount that it considers fair.

These rules apply for banking and non-banking institutions, provided that the interest rates of the bank loans are not deemed usurious. The Mexican Central Bank regulates this rate.

Use and creation of guarantees

Are guarantees used in your jurisdiction?


What is the procedure for their creation?

In general, the creation of guarantees will depend on the type of guarantee and asset that is granted as security. Guarantees may be:

  • personal guarantees (eg, corporate guarantors or bondsman); or
  • property guarantees (eg, over the borrower’s real estate or movable assets).

Personal guarantees must be made in writing. In a property guarantee in which the asset granted as security is real estate (eg, mortgage or trust-holding real estate) the guarantee must be granted in writing, notarised and registered with the Public Registry of Property of the state in which the real estate is located. Where the security is pledged over movable property (eg, pledges, non-possessory pledges and trusts) it must also be made in writing and registered electronically with the Sole Registry of Movable Guarantees of the Public Registry of Commerce. Pledges over stock do not require notarisation or registration with the Sole Registry of Movable Guarantees.

Additional requirements may be needed regarding the following:

  • For pledges on stock and other negotiable instruments, an endorsement of the corresponding certificate and registration within the issuer’s books is required.
  • For pledges on publicly traded stock, a pledge agreement must be entered into and an account in a stock deposit institution opened.
  • For pledges on IP rights, a pledge agreement must be entered into which must be notarised and registered with the Mexican Industrial Property Institute.
  • For mortgages on vessels, the mortgage must be granted before notary public and registered at the Maritime Public Registry.
  • For mortgages on aircraft, the mortgage must be granted before a notary public and registered at the Mexican Aeronautic Registry.

Do any laws affect or restrict the granting or enforceability of guarantees in your jurisdiction (eg, upstream guarantees)?

Enforceability of security interests regarding third parties requires registration with the Public Registry of Property or of Commerce, as applicable. Registration does not necessarily create a security interest per se, but it does have publicity purposes. Guarantees may not be enforceable if the applicable formalities to create them are not followed or if there is a third party with a better claim over the secured asset before the security interest is registered (eg, if a third party has registered a security interest over the same asset before or a third-party claim, such as a seizure, was filed in the past).

When the security is a mortgage and it is not registered with the Public Registry of Property, it is not enforceable on third parties. Thus, if a borrower transfers the secured asset to a third party, the third party acquires it in good faith. If the transfer is duly registered with the Public Registry, the mortgage will not be enforceable on this third party.

The enforcement of guarantees may be limited by bankruptcy provisions.

Subordination and priority

Describe the most common methods of structuring the priority of debts and security.

The most common methods for structuring subordinations and priorities are through contractual arrangements such as intercreditor arrangements between senior creditors and other creditors.

Documentary taxes and stamp duty

Are any taxes, stamp duty or other fees payable on the granting of a loan, guarantee or security interest, or on its enforcement?

There are no documentary taxes in Mexico. However, there are:

  • registration fees for real estate asset guarantees (the cost of these depends on the state where the asset is located);
  • notary fees, which are based on the value of the assets to be granted; and
  • fiduciary fees when the security is structured through a guarantee trust.

Cross-border lending

Governing law

Is it more common for local law to govern the terms of the facility documentation or is the law of another jurisdiction often elected by the parties (eg, English law or New York law)?

New York law is the jurisdiction most commonly elected for cross-border lending. Security documents are (and should be) governed under Mexican law when the secured assets are in Mexico.


Are there any restrictions on the making of loans by foreign lenders or the granting of security or guarantees to foreign lenders?

There are no restrictions on the making of loans by foreign lenders. However, lenders should  consider that under the Mexican Constitution foreigners are prohibited from holding real estate within the Restricted Zone (a 50 kilometre (km) wide strip along the Mexican coastline and 100 km-wide area along the borders). If a foreign lender intends to take a security interest within the Restricted Zone, appropriate mechanisms should be implemented to address this prohibition.

Are there any exchange controls that restrict payments to a foreign lender under a security document, guarantee or loan agreement?

There are no exchange controls in Mexico. However, all debts in Mexico may be paid in Mexican pesos, even if another foreign currency is agreed on, in which case the borrower must pay at the exchange rate published in the Official Federal Gazette.

Security – general

Security agreements

Is it possible to create a security interest over all assets of an entity? If so, would a single security agreement suffice or is a separate agreement required for each type of asset?

Yes, it is possible to create a security interest over all of an entity’s assets. Whether a single security agreement is sufficient or separate agreements are required will depend on the type of asset and structure of the transaction.

Blanket liens are available only on movable property. For non-possessory pledges, the pledged assets may be designated generically and a non-possessory pledge agreement will suffice.

It is possible to create a security interest over all of an entity’s assets. However, such assets must be individually designated. In this case, a trust agreement is required.

For example, if a borrower grants a security interest on its accounts receivable, a non-possessory pledge is sufficient. Assuming that it is additional collateral, the borrower will grant a security interest over its premises. In such a case, a separate mortgage agreement is required, unless the amount of the loan facility justifies the use of a guarantee trust agreement (trustees’ fees are usually high). A single trust may be used to create a security agreement on the borrower’s accounts receivable and the borrower’s real estate.

Release of security

What are the formalities for releasing security over the most common forms of assets?

The formalities for releasing security over the most common forms of asset will depend on the type of security agreement.

Real estate To release a security over real estate (eg, mortgage and guarantee trusts), the cancellation of the security must be notarised and registered with the Public Registry of Property.  

Movable property To release a security over movable property secured with a non-possessory pledge and guarantee trust, the cancellation of the security interest must be notarised and filed electronically with the Sole Registry of Movable Guarantees of the Public Registry of Commerce. Where the intellectual property is included in the secured assets, the release must be further formalised with the Mexican Institute of Industrial Property.

Where the guarantee was granted through a guarantee trust, the lender acting as the beneficiary of the trust must request the trustees to release the assets granted as security.

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